UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                               FORM 10-K

                   FOR ANNUAL AND TRANSITION REPORTS PURSUANT
         TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
|X|  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

     For the fiscal  year  ended  December  31,  2006
                               OR
     |_|  TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF
     THE SECURITIES EXCHANGE ACT OF 1934

     For the transition period from ________ to ________

                     Commission file number 1-07265

                           AMBASE CORPORATION
         (Exact name of registrant as specified in its charter)

               DELAWARE                     95-2962743
        (State of incorporation)    (I.R.S.Employer Identification No.)

            100 Putnam Green, 3rd Floor, Greenwich, CT 06830-6027
                  (Address of principal executive offices)

     Registrant's telephone number, including area code: (203) 532-2000

     Securities registered pursuant to Section 12(g) of the Act:

                              Title of each class
                         Common Stock ($0.01 par value)

                         Rights to Purchase Common Stock

     Indicate by check mark if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act.
Yes______ No X

     Indicate by check mark if the  registrant  is not  required to file reports
pursuant  to  Section  13 or  Section  15(d)  of  the  Act.
Yes______ No X

     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the  preceding  12 months,  and (2) has been  subject to such filing
requirements for the past 90 days.
Yes X No ______

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. X

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one): Large Accelerated Filer__ Accelerated Filer __ Non-Accelerated Filer X

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act).
Yes______ No X



<PAGE>
     At February 28, 2007, there were 44,968,519  shares of registrant's  Common
Stock  outstanding.  At June 30, 2006 the aggregate market value of registrant's
voting securities  (consisting of its Common Stock) held by nonaffiliates of the
registrant, based on the average bid and asking price on such date of the Common
Stock of $0.47 per share,  was  approximately  $17  million.  The  Common  Stock
constitutes registrant's only outstanding class of security.

     Portions of the registrant's definitive Proxy Statement for its 2007 Annual
Meeting of Stockholders,  which Proxy Statement  registrant intends to file with
the Securities  and Exchange  Commission not later than 120 days after the close
of its  fiscal  year,  is  incorporated  by  reference  with  respect to certain
information contained therein, in Part III of this Annual Report.

     The Exhibit Index is located in Part IV, Item 15, Page 48.

<PAGE>

AmBase Corporation

Annual Report on Form 10-K
December 31, 2006
<TABLE>
<CAPTION>
<S>                                                                                                             <C>

TABLE OF CONTENTS                                                                                              Page
----------------------------------------------                                                               ------

PART I

Item 1.       Business............................................................................................1

Item 1A.      Risk Factors........................................................................................2

Item 1B.      Unresolved Staff Comments...........................................................................5

Item 2.       Properties..........................................................................................5

Item 3.       Legal Proceedings...................................................................................5

Item 4.       Submission of Matters to a Vote of Security Holders.................................................5

              Executive Officers of the Registrant................................................................5

PART II

Item 5.       Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
                Equity Securities.................................................................................6

Item 5.       Performance Graph...................................................................................8

Item 6.       Selected Financial Data.............................................................................9

Item 7.       Management's Discussion and Analysis of Financial Condition and Results of Operations...............9

Item 7A.      Quantitative and Qualitative Disclosures About Market Risk.........................................17

Item 8.       Financial Statements and Supplementary Data........................................................18

Item 9.       Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............46

Item 9A.      Controls and Procedures............................................................................46

Item 9B.      Other Information..................................................................................46

PART III

Item 10.      Directors and Executive Officers of the Registrant.................................................46

Item 11.      Executive Compensation.............................................................................46

Item 12.      Security Ownership of Certain Beneficial Owners & Management.......................................47

Item 13.      Certain Relationships and Related Transactions.....................................................47

Item 14.      Principal Accountant Fees and Services.............................................................47

PART IV

Item 15.      Exhibits and Financial Statement Schedules.........................................................48
</TABLE>



<PAGE>
PART I

ITEM 1.       BUSINESS

     AmBase  Corporation  (the "Company" or "AmBase") is a Delaware  corporation
that was incorporated in 1975 by City Investing  Company  ("City").  AmBase is a
holding  company that,  through a wholly owned  subsidiary,  owns one commercial
office  building in Greenwich,  Connecticut  that is managed and operated by the
Company.  The building is approximately  14,500 square feet; with  approximately
3,500  square  feet  utilized  by the Company  for its  executive  offices;  the
remaining space is currently  unoccupied and available for lease.  The executive
office of the Company is located at 100 Putnam  Green,  Third Floor,  Greenwich,
Connecticut 06830.

     The  Company's  assets  currently   consist  primarily  of  cash  and  cash
equivalents,  investment  securities,  and real estate owned.  The Company earns
non-operating   revenue   principally   consisting  of  investment  earnings  on
investment securities and cash equivalents.  The Company continues to evaluate a
number of possible acquisitions,  and is engaged in the management of its assets
and liabilities, including the contingent assets, as described in Part II - Item
8 - Notes 9 and 10 to the Company's consolidated financial statements. From time
to time, the Company and its subsidiaries may be named as a defendant in various
lawsuits  or  proceedings.  The  Company  intends to  aggressively  contest  all
litigation and contingencies, as well as pursue all sources for contributions to
settlements. The Company had 6 employees at December 31, 2006.

     In July 2005,  the Company sold its 38,000  square foot office  building at
Two Soundview Drive in Greenwich,  Connecticut ("Two  Soundview").  Accordingly,
the results of operations of Two Soundview have been retroactively  reclassified
as  discontinued  operations  in  the  accompanying  Consolidated  Statement  of
Operations for the periods  presented in accordance  with  Financial  Accounting
Standards  Board,   Statement  of  Financial   Accounting   Standards  No.  144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets" ("SFAS 144").
See  Part  II -  Item  8 -  Note  13 to  the  Company's  Consolidated  Financial
Statements for further information.

     Background

     City  originally  incorporated  AmBase as the holding  company for The Home
Insurance Company,  and its affiliated property and casualty insurance companies
("The  Home").  In 1985,  City,  which owned all the  outstanding  shares of the
Common Stock of the Company,  distributed the Company's  shares to City's common
stockholders. The Home was sold in February 1991.

     In August 1988, the Company acquired Carteret Bancorp Inc. Carteret Bancorp
Inc.,  through its principal wholly owned subsidiary,  Carteret Savings Bank, FA
("Carteret"),  was  principally  engaged in retail  and  consumer  banking,  and
mortgage banking including mortgage  servicing.  On December 4, 1992, the Office
of  Thrift  Supervision  ("OTS")  placed  Carteret  in  receivership  under  the
management of the Resolution  Trust  Corporation  ("RTC") and a new institution,
Carteret  Federal Savings Bank, was established to assume the assets and certain
liabilities  of Carteret.  Following  the seizure of  Carteret,  the Company was
deregistered as a savings and loan holding company by the OTS,  although the OTS
retains jurisdiction for any regulatory violations prior to deregistration.  See
Part II - Item 8 - Note 10 to the Company's  consolidated  financial  statements
for a discussion of Supervisory Goodwill litigation relating to Carteret.

     In December  1997, the Company  formed a new wholly owned  subsidiary,  SDG
Financial Corp. ("SDG Financial"),  to pursue merchant banking  activities.  SDG
Financial  purchased an equity interest in SDG, Inc. ("SDG") and was granted the
exclusive right to act as the investment  banking/financial advisor to SDG, Inc.
and  all  of  its  subsidiaries  and  affiliates.  The  Company  also  purchased
convertible  preferred and common stock in AMDG, Inc. ("AMDG"), a majority owned
subsidiary of SDG. SDG and AMDG are development stage pharmaceutical  companies.
In  connection  with a  litigation  settlement  with SDG and AMDG,  the  Company
received  $72,000 in April 2006.  The Company  remains a shareholder  in SDG and
AMDG and will  continue to monitor the status of SDG and its  subsidiary,  AMDG,
Inc. These investments have no current carrying value, as the Company's original
cost basis was previously written off.


<PAGE>
STOCKHOLDER INQUIRIES

     Stockholder inquiries,  including requests for the following: (i) change of
address;  (ii) replacement of lost stock  certificates;  (iii) Common Stock name
registration changes; (iv) Quarterly Reports on Form 10-Q; (v) Annual Reports on
Form 10-K; (vi) proxy material;  and (vii) information regarding  stockholdings,
should be directed to:

           American Stock Transfer and Trust Company
           59 Maiden Lane
           New York, NY  10038
           Attention:  Shareholder Services
           (800) 937-5449 or (718) 921-8200 Ext. 6820

     As the Company does not maintain a website,  copies of Quarterly Reports on
Form 10-Q, Annual Reports on Form 10-K and Proxy Statements can also be obtained
directly  from the Company free of charge by sending a request to the Company by
mail as follows:

           AmBase Corporation
           100 Putnam Green, 3rd Floor
           Greenwich, CT 06830
           Attn: Shareholder Services

     The Company is subject to the informational  requirements of the Securities
Exchange Act of 1934 (the "Exchange  Act").  Accordingly,  the Company's  public
reports,  including  Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K
and Proxy  Statements,  can be obtained  through  the  Securities  and  Exchange
Commission ("SEC") EDGAR Database available on the SEC's website at www.sec.gov.
Materials  filed with the SEC may also be read or copied by  visiting  the SEC's
Public Reference Room, 100 F Street,  NE, Washington,  DC 20549.  Information on
the  operation  of  the  Public  Reference  Room  may  be  obtained  by  calling
1-800-SEC-0330.

ITEM 1A.      RISK FACTORS

     The  Company  is subject  to  various  risks,  many of which are beyond the
Company's  control,  which  could have a negative  effect on the Company and its
financial  condition.  As a result of these and other  factors,  the Company may
experience  material  fluctuations in future operating results on a quarterly or
annual  basis,  which  could  materially  and  adversely  affect  the  Company's
business, financial condition,  operating results and stock price. An investment
in the Company's stock involves  various risks,  including those mentioned below
and  elsewhere in this Annual Report on Form 10-K (this  "Annual  Report"),  and
those that are detailed  from time to time in the  Company's  other filings with
the  Securities  and  Exchange  Commission.  You should  carefully  consider the
following risk factors,  together with all of the other information  included or
incorporated  by reference in this Annual  Report,  before you decide whether to
purchase the Company's common stock.

     The  Company is a  plaintiff  in a legal  proceedings  seeking  recovery of
damages for the loss of the Company's  investment  in Carteret.  There can be no
assurances of a favorable outcome for the Company in this legal proceeding.

     The  Company is a  plaintiff  in a legal  proceedings  seeking  recovery of
damages from the United States  Government for the loss of the Company's  wholly
owned  subsidiary,  Carteret  Savings  Bank,  F.A.  This  legal  proceeding  was
commenced in 1993 and will likely  continue  for several more years.  There have
been and may continue to be rulings in other "supervisory  goodwill" cases which
have had and/or may have adverse affects on the Company's  Supervisory  Goodwill
proceeding.  In addition,  due to the extended length of time that  proceedings,
rulings, trial decisions and possible appeals in this matter may take, it is not
possible  for the  Company to predict  when this  matter will be resolved or the
likelihood of a favorable outcome.


<PAGE>
     The Company is subject to risks inherent in owning and leasing real estate.

     The  Company is subject to  varying  degrees of risk  generally  related to
leasing and owning real estate many of which are beyond the  Company's  control.
In addition to general  risks  related to owning  commercial  real  estate,  the
Company's risks include, among others:

     o  deterioration  in regional  and local  economic  and real estate  market
conditions,

     o potential changes in supply of, or demand for rental  properties  similar
to the Company's,

     o competition for tenants and changes in rental rates,

     o concentration in a single real estate asset and class,

     o difficulty in reletting properties on favorable terms or at all,

     o impairments in the Company's ability to collect rent payments when due,

     o the potential for uninsured casualty and other losses,

     o the impact of present or future environmental  legislation and compliance
with environmental laws,

     o adverse changes in zoning laws and other regulations,

     o changes in federal or state tax laws, and

     o acts of terrorism and war.

     Each  of  these  factors  could  cause a  material  adverse  effect  on the
Company's  financial  condition  and results of  operations.  In addition,  real
estate  investments  are  relatively  illiquid,  which means that the  Company's
ability to  promptly  sell the  Company's  property  in  response  to changes in
economic and other conditions may be limited.

     Property taxes on the Company's property may increase without notice.

     The property the Company owns is subject to real property  taxes.  The real
property  taxes on the  Company's  property  and any other  properties  that the
Company  acquires in the future may increase as property tax rates change and as
those  properties are assessed or reassessed by tax  authorities.  To the extent
that the Company's  available rental space remains  unoccupied or future tenants
are unable or unwilling to pay such  increase in  accordance  with their leases,
the Company's net operating expenses may increase.

     The Company's business is concentrated in Southern Connecticut, and adverse
conditions in the region could negatively impact the Company's operations.

     The Company's current operations are concentrated in Southern  Connecticut,
specifically in the Greenwich area. As a result, the value of the Company's real
estate is  dependent on the  economic  strength of that  region.  Because of the
Company's  geographic  concentration  and its  single  property,  the  Company's
operations are more vulnerable to adverse changes in the Greenwich  economy than
those of larger,  more  diversified  companies.  Should the  Company  experience
softening  in the  Company's  market  and not be able to  offset  the  potential
negative market influences on price and volume, the Company's  financial results
could be negatively impacted.

     The Company is in a competitive business.

     The real estate industry is highly  competitive.  The Company  competes for
tenants  for its  unoccupied  rental  space with a large  number of real  estate
property  owners and other  companies  that  sublet  properties.  The  Company's
principal  means of  competition  are rents  charged in  relation  to the income
producing  potential of the  location.  In addition,  the Company  expects other
major real estate  investors,  some with much greater resources than the Company
has,  may  compete  with  us for  attractive  acquisition  opportunities.  These
competitors  include REITs,  investment banking firms and private  institutional
investors.  This competition has increased prices for commercial  properties and
may impair the  Company's  ability to make  suitable  property  acquisitions  on
favorable terms in the future.


<PAGE>
     The  Company's  future  cash flow is  dependent  on  renewal  of leases and
reletting of the Company's space.

     The Company is subject to risks that its presently  available  rental space
may not be successfully rented, that financial distress of the Company's tenants
may lead to vacancies at the Company's property, that leases may not be renewed,
that  locations  may not be relet or that the  terms  of  renewal  or  reletting
(including the cost of required  renovations) may be less favorable than current
lease  terms.  In  addition,  numerous  properties  compete  with the  Company's
property  in  attracting  tenants  to lease  space.  The  number of  competitive
properties  in a  particular  area could have a material  adverse  effect on the
Company's ability to lease the Company's  property or newly acquired  properties
and on the rents charged.  If the Company were unable to promptly relet or renew
the leases for all or a substantial  portion of this location,  or if the rental
rates upon such renewal or reletting were significantly lower than expected, the
Company's  cash flow could be  adversely  affected  and the resale  value of the
Company's property could decline.

     The Company may not be able to insure certain risks economically.

     The Company may  experience  economic  harm if any damage to the  Company's
property is not covered by  insurance.  The Company  cannot be certain  that the
Company  will be able to insure  all risks  that the  Company  desires to insure
economically or that all of the Company's insurers will be financially viable if
the Company  make a claim.  The  Company may suffer  losses that are not covered
under the Company's insurance policies. If an uninsured loss or a loss in excess
of insured  limits  should occur,  the Company could lose capital  invested in a
property, as the well as any future revenue from the property.

     Changes in the composition of the Company's assets and liabilities  through
acquisitions,  divestitures or corporate  restructuring may affect the Company's
results.

     The Company  may make  future  acquisitions  or  divestitures  of assets or
changes  in how such  assets  are held.  Any  change in the  composition  of the
Company's  assets and  liabilities or how such assets and  liabilities  are held
could  significantly  affect the Company's financial position and the risks that
the Company faces.

     The Company may not be able to generate  sufficient taxable income to fully
realize the Company's deferred tax asset.

     The  Company  has  federal  income  tax  net  operating  tax  loss  ("NOL")
carryforwards  and other tax  attributes.  If the  Company is unable to generate
sufficient  taxable  income,  the Company  may not be able to fully  realize the
benefit of the NOL carryforwards.

     Because the Company from time to time maintains a majority of its assets in
securities,  the Company may in the futurebe deemed to be an investment  company
under the  Investment  Company Act of 1940  resulting  in  additional  costs and
regulatory burdens.

     Currently, the Company believes that either it is not within the definition
of "Investment  Company" as the term is defined under the Investment Company Act
of 1940 (the "1940 Act") or,  alternatively  may rely on one or more of the 1940
Act's exemptions. The Company intends to continue to conduct its operations in a
manner that will exempt the Company from the  registration  requirements  of the
1940 Act.  If the  Company  were to become  deemed to be an  investment  company
because of the Company's investments  securities holdings,  the Company would be
required to register as an  investment  company under the 1940 Act. The 1940 Act
places   significant   restrictions  on  the  capital  structure  and  corporate
governance of a registered  investment  company,  and  materially  restricts its
ability to conduct  transactions  with affiliates.  Compliance with the 1940 Act
could also increase the  Company's  operating  costs.  Such changes could have a
material  adverse  affect on the Company's  business,  results of operations and
financial condition.

     Terrorist  attacks  and other acts of violence or war may affect the market
on which the  Company's  common  stock  trades,the  markets in which the Company
operate, the Company's operations and the Company's results of operations.

     Terrorist attacks or armed conflicts could affect the Company's business or
the businesses of the Company's tenants. The consequences of armed conflicts are
unpredictable, and the Company may not be able to foresee events that could have
an adverse effect on the Company's business. More generally, any of these events
could cause consumer  confidence and spending to decrease or result in increased
volatility in the U.S. and worldwide  financial  markets and economy.  They also
could be a factor resulting in, or a continuation  of, an economic  recession in
the U.S. or abroad.  Any of these occurrences  could have a significant  adverse
impact  on the  Company's  operating  results  and  revenues  and may  result in
volatility of the market price for the Company's common stock.
<PAGE>
     ITEM 1B. UNRESOLVED STAFF COMMENTS

     None.

     ITEM 2. PROPERTIES

     The Company owns one commercial office building in Greenwich,  Connecticut.
The building is  approximately  14,500 square feet and is available for lease to
unaffiliated third parties with approximately  3,500 square feet utilized by the
Company for its executive offices.

     ITEM 3. LEGAL PROCEEDINGS

     For  a  discussion  of  the  Company's  legal  proceedings,  including  the
Company's Supervisory Goodwill litigation, see Part II - Item 8 - Note 10 to the
Company's consolidated financial statements.

     ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

     Executive Officers of the Registrant

     Each  executive  officer  is  elected  to  serve in the  executive  officer
capacity set forth opposite his respective name until the next Annual Meeting of
Stockholders.  Other than those  noted  below,  the  Company is not aware of any
family  relationships  between any of the executive officers or directors of the
Company.

     Set forth below is a list of executive  officers of the Company at December
31, 2005:
<TABLE>
<CAPTION>
<S>                                     <C>             <C>

Name                                    Age                    Title
====                                    ===                  ==========
Richard A. Bianco                        59             Chairman, President and
                                                        Chief Executive Officer


John P. Ferrara                          45               Vice President,
                                                       Chief Financial Officer
                                                            and Controller

Joseph R. Bianco                         62                    Treasurer
</TABLE>

     Mr. Bianco was elected a director of the Company in January  1991,  and has
served as President and Chief  Executive  Officer of the Company since May 1991.
On January 26, 1993,  Mr. Bianco was elected  Chairman of the Board of Directors
of the Company. He served as Chairman,  President and Chief Executive Officer of
Carteret, then a subsidiary of the Company, from May 1991 to December 1992.

     Mr. Ferrara was elected to the position of Vice President,  Chief Financial
Officer and Controller of the Company in December 1995, having previously served
as Acting Chief  Financial  Officer,  Treasurer and Assistant Vice President and
Controller  since January 1995; as Assistant Vice President and Controller  from
January  1992 to  January  1995;  and as  Manager of  Financial  Reporting  from
December 1988 to January 1992.

     Mr. J. Bianco was elected to the  position of  Treasurer  of the Company in
January  1998.  He has  dedicated  his  career  to the  financial  services  and
investment industry. Prior to his employment with the Company in 1996, he worked
for Merrill Lynch & Co. ("Merrill") as Vice President, responsible for Sales and
Marketing in the Merrill Global Securities Clearing division from 1983 to 1996.


<PAGE>
     PART II

     ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS,
AND ISSUER PURCHASES OF EQUITY SECURITIES

     The Common Stock of the Company  trades  through one or more market makers,
with  quotations  made available in the "pink sheets"  published by the National
Quotation Bureau, Inc. ("Pink Sheets"),  under the symbol ABCP. The sales prices
per share for the  Company's  Common Stock  represent  the range of the reported
high and low bid  quotations as indicated in the Pink Sheets or as  communicated
orally to the Company by market makers.  Such prices reflect interdealer prices,
without  retail  mark-up,  markdown  or  commission,  and  may  not  necessarily
represent actual transactions.
<TABLE>
<CAPTION>
<S>                                            <C>                <C>                       <C>               <C>
                                                        2006                                         2005
                                                =====================                       =====================
                                               High               Low                       High              Low
                                               ====               ===                       ====              ===
First Quarter.......................       $    0.63          $   0.52                 $    0.90          $   0.61
Second Quarter......................            0.55              0.46                      0.75              0.56
Third Quarter.......................            0.55              0.44                      0.70              0.58
Fourth Quarter......................            0.57              0.43                      0.71              0.52
</TABLE>

     As of February 28, 2007, there were approximately  14,300 beneficial owners
of the  Company's  Common  Stock.  No  dividends  were  declared  or paid on the
Company's  Common Stock in 2006 or 2005.  The Company does not intend to declare
or pay dividends in the foreseeable future.

     For information  concerning the Company's stockholder rights plan, see Part
II - Item 8 - Note 5 to the Company's consolidated financial statements.

     Common Stock Repurchase Plan:

     In January 2002, the Company  announced a common stock repurchase plan (the
"Repurchase  Plan") which allows for the  repurchase by the Company for up to 10
million shares of its common stock in the open market.

     The Repurchase Plan is conditioned upon favorable  business  conditions and
acceptable prices for the common stock.  Purchases under the Repurchase Plan may
be made,  from  time to time,  in the  open  market,  through  block  trades  or
otherwise.  Depending on market  conditions and other factors,  purchases may be
commenced or suspended any time or from time to time without prior notice.
<TABLE>
<CAPTION>
<S>                                           <C>             <C>               <C>                      <C>
                                             Total                          Total Number           Maximum Number
                                            Number of        Average     Shares Purchased         Shares that may
                                            Shares         Price Paid    as Part of Publicly     yet be Purchased
                                          Purchased         per Share     Announced Plans          under the Plan
                                        --------------------------------------------------------------------------
Opening Balance...........................         -           -                  50,000               9,950,000
January 1, 2006 - January 31, 2006........         -           -                  50,000               9,950,000
February 1, 2006 - February 28, 2006......   970,000       $   0.58            1,020,000               8,980,000
March 1, 2006 - March 31, 2006............         -           -               1,020,000               8,980,000
April 1, 2006 - April 30, 2006............         -           -               1,020,000               8,980,000
May 1, 2006 - May 31, 2006................         -           -               1,020,000               8,980,000
June 1, 2006 - June 30, 2006..............    50,000           0.49            1,070,000               8,930,000
July 1, 2006 - July 31, 2006..............         -           -               1,070,000               8,930,000
August 1, 2006 - August 31, 2006..........    95,000           0.47            1,165,000               8,835,000
September 1, 2006 - September 30, 2006....         -           -               1,165,000               8,835,000
October 1, 2006 - October 31, 2006........         -           -               1,165,000               8,835,000
November 1, 2006 - November 30, 2006......   150,000           0.45            1,315,000               8,685,000
December 1, 2006 - December 31, 2006......         -           -               1,315,000               8,685,000
                                        ------------
Total....................................  1,265,000
                                        ============
</TABLE>
<PAGE>
     Delaware  Court of  Chancery  Section  220 Books and  Records  Action:  Two
Stockholders who owned approximately  14.4% of the Company's  outstanding common
stock (the "Stockholders") had previously made demand in January 2004 to inspect
certain  Company  books and  records  pursuant  to Section  220 of the  Delaware
General Corporation Law. The Company opposed the request on various grounds, and
the  Stockholders  brought  suit in March 2004 to compel  inspection  of certain
Company  books and  records.  In August  2005,  the Court of  Chancery  issued a
Memorandum   Opinion  finding  that  the  Stockholders  had  met  the  technical
requirements  of Section 220 and had stated a proper  purpose under Section 220,
and were legally entitled to inspect  specified books and records,  but declined
to find the Company liable for the Stockholders' attorneys' fees.

     In October 2006, in order to eliminate  continued  involvement in the above
referenced action or potential future actions,  and the resultant time,  expense
and potential adverse impact on the Company's current  operations and litigation
claims, the Company, its Chief Executive Officer and principal stockholder,  and
the Company's  Directors entered into an agreement with the Stockholders who had
initiated  the  action to obtain  Company  books and  records.  Pursuant  to the
agreement:  (i)  the  Company's  Chief  Executive  Officer  agreed  to  purchase
6,615,531 shares of Company common stock  (representing  approximately  14.4% of
the Company's outstanding common stock and all of the Company stock beneficially
owned  by the  Stockholders),  for a cash  purchase  price of  $0.55  per  share
($3,638,542  in the  aggregate  for all of the  shares);  (ii) the  Stockholders
agreed to dismiss the books and records action and release any additional claims
the Stockholders  might have,  including  claims the Stockholders  said they had
been  considering  litigating  against the Company,  its Directors and its Chief
Executive  Officer;  (iii) the Stockholders  entered into a standstill and other
agreements  which will preclude them from taking a position in the Company for a
period  of time;  and (iv)  the  Company  agreed  to pay the  Stockholders  $1.1
million.  No  portion  of the  purchase  price for the  shares  acquired  by the
Company's  Chief  Executive  Officer was provided by or financed by the Company.
Although the shares were not offered to the Company for purchase,  the Company's
Board of  Directors  declined  to  purchase  the  shares at the price  they were
offered  to the  Company's  Chief  Executive  Officer.  A  settlement  charge of
$1,100,000  recorded as other expense and related insurance recovery of $400,000
recorded as other income,  have been  reflected  Statement of Operations for the
year ended  December 31, 2006. The net cost to the Company of the settlement was
approximately $700,000. This matter is, therefore, concluded.




<PAGE>
     STOCK PERFORMANCE GRAPH

     The following graph compares the cumulative total shareholder return on the
Company's  Common  Stock for the past five  years  with the  performance  of the
Standard & Poor's 500 Financials  Index (S&P 500  Financials) and the Standard &
Poor's 500 Stock Index (S&P 500) for that period.  The graph assumes that a $100
investment was made in the Company's Common Stock and each of the indices at the
earliest date shown, and the dividends,  if any, were  reinvested.  No dividends
have been paid by the  Company  over the past five (5)  years.  The stock  price
performance  shown in the graph below  should not be  considered  indicative  of
potential future stock price performance.






































                                   December 31
<TABLE>
<CAPTION>
<S>                           <C>            <C>              <C>             <C>             <C>            <C>

--------------------- --------------- --------------- ---------------- --------------- --------------- ---------------

   Company/Index              2001           2002            2003             2004            2005            2006
--------------------- --------------- --------------- ---------------- --------------- --------------- ---------------

AmBase Corporation            100.00           85.44            63.11           74.76           50.97           48.54

S&P 500
Index                         100.00           77.90           100.25          111.15          116.61          135.03

S&P 500 Financials
Index                         100.00           85.36           111.85          124.03          132.06          157.41
--------------------- --------------- --------------- ---------------- --------------- --------------- ---------------
</TABLE>



<PAGE>
     ITEM 6. SELECTED FINANCIAL DATA

     The  selected  financial  data  should  be read  in  conjunction  with  the
Company's consolidated financial statements included in Part II - Item 8 of this
Form 10-K.  The  consolidated  statements of  operations,  for the periods ended
prior to the July 2005 sale of Two Soundview were retroactively  reclassified to
reflect the operations as discontinued operations.
<TABLE>
<CAPTION>
<S>                                                  <C>             <C>         <C>          <C>              <C>

                                                                        Years ended December 31
                                                  =================================================================
(in thousands, except per share data)                 2006           2005 (a)     2004         2003            2002 (b)
                                                      ====           ====         ====         ====          ======
Operating revenue ..........................      $     92       $    170     $    176      $   320        $    320
Interest income.............................         1,846          1,034          505          334             705
                                                  ========       ========     ========      =======        ========
Loss from continuing operations.............      $(5,463)      $  (5,519)    $ (4,696)     $(5,102)       $ (5,230)
Income from discontinued operations.........             -         10,647        1,345        1,543              97
                                                  --------       --------     --------      -------        --------
Net income (loss)..........................       $(5,463)       $  5,128     $ (3,351)     $(3,559)       $ (5,133)
                                                  ========       ========     ========      =======        ========
Loss from continuing operations - Basic.....      $ (0.12)       $  (0.12)    $  (0.10)     $ (0.11)       $  (0.11)
Income from discontinued operations - Basic.            -            0.23         0.03         0.03               -
                                                  --------       --------     --------     --------        --------
Net income (loss) per common share - Basic..      $ (0.12)       $   0.11     $  (0.07)    $  (0.08)       $  (0.11)
                                                  ========       ========     ========     ========        ========
Dividends ..................................            -               -            -            -               -
                                                  ========       ========     ========     ========        ========
Total assets................................      $42,148        $ 45,883     $ 40,860     $ 41,668        $ 43,656
Total stockholders' equity (deficit)........       24,667          29,682       25,574       29,367          32,902
                                                  =======        ========     ========     ========        ========
</TABLE>
     (a) Net  income in 2005  includes a  $10,298,000  gain from the sale of Two
Soundview.

     (b) Net loss in 2002  includes a  $1,600,000  write  down of the  Company's
investments in SDG and AMDG.


     ITEM 7.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations  should  be read  in  conjunction  with  the  consolidated  financial
statements and related  notes,  which are contained in Part II - Item 8, herein.
As a result of the sale of the Company's  38,000 square foot office  building at
Two Soundview Drive in Greenwich, CT ("Two Soundview") in July 2005, the results
of operations of Two Soundview have been designated as discontinued  operations,
and the Consolidated  Statements of Operations for the periods  presented herein
have been  retroactively  reclassified  to report the income  from  discontinued
operations separately from the results of continuing operations by excluding the
operating  revenues and expenses of discontinued  operations from the respective
statement  captions.  See Part I - Item 8 - note 13 for  additional  information
concerning the sale of Two Soundview.

     FINANCIAL CONDITION AND LIQUIDITY

     The  Company's  assets  at  December  31,  2006,  aggregated   $42,148,000,
consisting  principally of cash and cash  equivalents of $2,601,000,  investment
securities of $36,040,000  and real estate owned of $2,171,000.  At December 31,
2006,  the Company's  liabilities  aggregated  $17,481,000.  Total  stockholders
equity was $24,667,000.

     Other assets of $1,336,000 at December 31, 2006, consists  principally of a
$1,201,000 interest refund due from the Internal Revenue Service ("IRS"),  which
was received by the Company in January  2007.  This amount was recorded as other
income in the  accompanying  consolidated  Statement of Operations  for the year
ending  December 31,  2006.  See Results of  Operations - Continuing  Operation,
below for further information.


<PAGE>
     The liability for the Company's non tax-qualified  supplemental  retirement
plan, initially adopted by the Company in 1985, and as amended and restated (the
"Supplemental Plan"), which is accrued but not funded,  increased to $16,282,000
at December 31, 2006 from  $14,595,000  at December 31, 2005.  The  Supplemental
Plan liability  reflects the December 31, 2006 present value of the  anticipated
May 31, 2007 lump-sum payment amount of $16,676,115,  utilizing a 5.75% discount
rate factor.

     In March  2006,  the  Supplemental  Plan was  amended  to  provide  for its
automatic  termination  immediately  following  the payment to Mr. Bianco of his
Supplemental  Plan lump-sum benefit on or about May 31, 2007. In accordance with
the accounting for the Supplemental Plan's scheduled termination on or about May
31, 2007, in accordance with  accounting  principles  generally  accepted in the
United  States of America  ("GAAP"),  the  ultimate  liability  relating  to the
anticipated  termination  of  the  Supplemental  Plan  is not  reflected  in the
financial   statements  presented  herein,  as  all  conditions  for  the  final
termination  of the  Supplemental  Plan have not yet been met.  The Company will
continue to recognize an expense for the Supplemental  Plan and the Supplemental
Plan liability will increase through the date on which the Supplemental  Plan is
terminated.  The  anticipated  May 31, 2007 lump-sum  Supplemental  Plan benefit
payment to Mr.  Bianco of  $16,676,115  is  expected  to be paid to him from the
Company's available financial resources.  The Supplemental Plan liability can be
further affected by changes in discount rates,  mortality,  and experience which
could be different from those assumed.

     For a further  discussion of the  Supplemental  Plan and Mr.  Bianco's 2007
Employment  Agreement,  see  Part  II  -  Item  8 -  Note  7  to  the  Company's
consolidated   financial  statements  and  Application  of  Critical  Accounting
Policies - Supplemental Retirement Plan, below.

     For the year  ended  December  31,  2006,  cash of  $4,519,000  was used by
continuing  operations,  including  the payment of operating  expenses and prior
year accruals; partially offset by the receipt of interest income and investment
earnings.  The cash needs of the Company for 2006 were principally  satisfied by
interest income received on investment  securities and cash  equivalents and the
Company's  financial  resources.  Management believes that the Company's capital
resources are sufficient to continue operations for 2007.

     For the year  ended  December  31,  2005,  cash of  $5,328,000  was used by
continuing  operations,  including  the payment of operating  expenses and prior
year's accruals (including the legal accrual described below);  partially offset
by the receipt of rental income,  interest income and investment  earnings.  The
cash needs of the Company for 2005 were  principally  satisfied by rental income
and investment  earnings received on investment  securities and cash equivalents
and the Company's  financial  resources.  During July 2005, the Company received
$27,442,000  of net cash  proceeds  from the sale of Two  Soundview  as  further
discussed  in  Part II - Item 8 - note  13.  The  proceeds  were  reinvested  in
treasury  bills and are included in investment  securities,  held to maturity in
the Company's Consolidated Balance Sheet.

     In March 2005,  the Company paid  approximately  $1.8 million of previously
incurred  legal fees and other expenses  relating to the Company's  defense of a
withholding  obligation issue with the IRS which was  successfully  concluded in
October  2001.  The  Company  had  previously  accrued  these  costs  which were
reflected  in  other   liabilities  in  prior  period   consolidated   financial
statements.

     For the year  ended  December  31,  2004,  cash of  $3,405,000  was used by
continuing  operations,  including  the payment of operating  expenses and prior
year accruals, partially offset by the receipt of rental income, interest income
and investment earnings. The cash needs of the Company for 2004 were principally
satisfied  by rental  income and  investment  earnings  received  on  investment
securities and cash equivalents and to a lesser extent, the Company's  financial
resources.

     Real estate owned  consists of a commercial  office  building in Greenwich,
Connecticut  which the Company owns and manages.  The building is  approximately
14,500 square feet;  approximately  3,500 square feet is utilized by the Company
for its executive  offices;  the  remaining  space is currently  unoccupied  and
available for lease.

     See Part II - Item 8 - note 13 for further information  concerning the sale
of the Company's 38,000 square foot building in July 2005. A gain from the sale,
of  approximately  $10.3  million,  is reflected in the  Company's  Statement of
Operations for the year ending December 31, 2005.



<PAGE>
     Pursuant to the Company's  Repurchase Plan, the Company  repurchased,  from
unaffiliated  parties,  an aggregate of 1,265,000  shares of common stock during
the year ended  December 31, 2006, at various  dates,  at market prices at their
time of purchase.  See Part II - Item 8 - Note 5 for further details with regard
to the  Company's  purchases  of  common  stock  pursuant  to its  common  stock
repurchase plan. There are no material  commitments for capital  expenditures as
of  December  31,  2006.  See  Part  II -  Item  8 -  Note  7 to  the  Company's
consolidated  financial  statements for  information  regarding the  anticipated
Supplemental  Plan lump-sum  benefit payment of $16,676,115 (to Mr. Bianco,  the
Company's Chairman,  President and Chief Executive Officer), expected to be paid
on or about May 31, 2007.  Inflation has had no material  impact on the business
and operations of the Company.

     The Company continues to evaluate a number of possible acquisitions, and is
engaged  in  the  management  of  its  assets  and  liabilities,  including  the
contingent  assets.  Discussions  and  negotiations  are ongoing with respect to
certain of these  matters.  The  Company  intends to  aggressively  contest  all
litigation and contingencies, as well as pursue all sources for contributions to
settlements.  For  a  discussion  of  lawsuits  and  proceedings,   including  a
discussion of the Supervisory Goodwill  litigation,  see Part II - Item 8 - Note
10 to the Company's consolidated financial statements.

     RESULTS OF OPERATIONS

     Continuing Operations

     The  Company's  main source of operating  revenue has recently  been rental
income earned on real estate owned. The Company  principally earns non-operating
revenue consisting  principally of investment earnings on investment  securities
and cash equivalents. The Company's management expects that operating cash needs
in  2007  will  be met  principally  by the  receipt  of  non-operating  revenue
consisting  of  interest  income  earned  on  investment   securities  and  cash
equivalents, and the Company's current financial resources.

     For the year ended  December  31,  2006,  the Company  recorded a loss from
continuing operations of $5,463,000 or $0.12 per share.

     For the year ended  December  31,  2005,  the Company  recorded a loss from
continuing operations of $5,519,000 or $0.12 per share.

     For the year ended  December  31,  2004,  the Company  recorded a loss from
continuing operations of $4,696,000 or $0.10 per share.

     As indicated herein, as a result of the sale of Two Soundview in July 2005,
the operating  results of the  Company's  Two  Soundview  property for the years
ended  December  31,  2005 and  2004  have  been  reclassified  to  discontinued
operations.  Accordingly,  rental income from real estate owned  represents  the
Company's  remaining  property  and was $92,000 in 2006  compared to $170,000 in
2005, and $176,000 in 2004. The decreased amount of $92,000 in 2006, compared to
$170,000  in 2005,  is  principally  the result of a decrease  in rental  income
received in 2006 compared to 2005 due to unoccupied office space during the last
half of 2006, which is currently  available for lease, versus occupancy in 2005.
The slight decreased  amount of $170,000 in 2005,  compared to $176,000 in 2004,
is principally the result of office vacancy in 2005 compared to office vacancies
during a portion of 2004.

     Compensation  and benefits  increased to $4,778,000 in 2006 from $4,212,000
in 2005, and from $4,150,000 in 2004.  Included in compensation  and benefits is
an accrual for the  Supplemental  Plan of $2,539,000  for 2006,  $2,087,000  for
2005, and $1,890,000 for 2004.

     The  increase  in  compensation   and  benefits  in  2006  versus  2005  is
principally  due to a $452,000  increase  in the  Supplemental  Plan  accrual as
discussed  below and an increase  resulting from the recognition of stock option
expense of $88,000 in 2006, in  accordance  with the  recognition  provisions of
Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based
Payment," ("SFAS 123R"). The increased amount of $4,212,000 in 2005, compared to
$4,150,000 in 2004, is primarily due to an increased  Supplemental  Plan expense
in 2005 versus 2004 as further described below, offset slightly by a lower level
of incentive compensation accruals in 2005 versus 2004.

     The increased  Supplemental  Plan expense of $2,539,000 in 2006 compared to
$2,087,000 in 2005 is due to recognition of an expense of $1,687,000,  comprised
of an expense of $1,224,000 recorded to increase the Supplemental Plan liability
to reflect the December 31, 2006 present value of the  anticipated  May 31, 2007
lump-sum  payment amount of $16,676,115,  utilizing a 5.75% discount rate factor
based on the 2007  Employment  Agreement  between the Company and Mr. Bianco and
the amendment of the Supplemental  Plan as further described in Part II - Item 8
- Note 7 to the Company's consolidated  financial statements,  and an expense of
$463,000 to reflect actuarially determined pension costs.
<PAGE>


     An  additional  Supplemental  Plan expense of $852,000 was recorded for the
year ended December 31, 2006, to amortize the Supplemental  Plan minimum pension
liability  adjustment.  The  minimum  pension  liability  adjustment,  which  is
included  as a  component  of  stockholders'  equity  within  accumulated  other
comprehensive  loss in the  Company's  consolidated  financial  statements,  was
$1,326,000  as of December 31, 2005,  and is being  amortized on a straight line
basis over the 14-month  period from April 1, 2006  through May 31, 2007,  as an
additional  Supplemental  Plan expense of $284,000 per quarter.  The  additional
minimum  pension  liability  amortization  is  included  as a  component  of the
aggregate Supplemental Plan expense of $2,539,000 for the full year period ended
December 31, 2006. The amortization of the additional  minimum pension liability
of $852,000 for the full year period ended December 31, 2006,  although recorded
as a component of compensation expense in the Company's  consolidated  statement
of operations,  does not result in a decrease in total stockholders'  equity, as
its  recognition  results in an increase in one  component  and a  corresponding
decrease in another  component of stockholders'  equity.  See Part II - Item 8 -
Note  7  to  the  Company's   consolidated   financial  statements  for  further
information.

     The  Company  adopted  Statement  123R  effective  on January  1, 2006.  In
accordance  with SFAS 123R,  the Company has applied the "modified  prospective"
method in which compensation cost for stock options is recognized beginning with
the  effective  date.  During the year ended  December  31,  2006,  the  Company
recorded  $88,000  of  compensation   expense  relating  to  stock  options.  In
accordance  with the "modified  prospective"  method,  no  compensation  expense
relating to stock options was recorded for the years ended December 31, 2005 and
2004. For further information  regarding the Company's adoption of SFAS 123R and
its impact on the Company's financial statements,  see Part II - Item 8 - Note 8
to the Company's consolidated financial statements.

     Professional  and outside  services  increased to  $2,655,000  in 2006 from
$2,003,000 in 2005 and from  $1,422,000 in 2004. The increase in the 2006 period
of $2,655,000  from $2,003,000 in 2005 is principally the result of higher legal
fees relating to the Supervisory  Goodwill  litigation as a result of discovery,
brief preparation and expert's reports relating to the Show Cause hearing and to
a lesser extent,  other  corporate  professional  fees. The increase in the 2005
period to  $2,003,000  from  $1,422,000 in 2004 is  principally  the result of a
higher  level  of legal  fees in  2005,  relating  to the  Supervisory  Goodwill
litigation as a result of discovery  relating to the Show Cause hearing and to a
lesser extent, other corporate professional fees. See Part II - Item 8 - Note 10
to the  Company's  consolidated  financial  statements  for a discussion  of the
Supervisory Goodwill litigation proceedings.

     The 2004  period  includes  an  additional  accrual of  approximately  $0.5
million of fees relating to the costs  associated with a withholding  obligation
issue with the IRS as further  discussed in Financial  Condition and  Liquidity,
herein.  Excluding this additional  expense,  professional  and outside services
would have been  $922,000 for the year 2004,  compared with  $2,003,000  for the
year 2005,  primarily due to an overall lower level of legal  expenses  incurred
during 2004 for the Supervisory Goodwill litigation proceedings.

     Property operating and maintenance expenses were $123,000 in 2006, $124,000
in 2005, and $102,000 in 2004.  The slight  increase in 2005 compared to 2004 is
due to increased utilities costs and other maintenance costs.

     Interest income was $1,846,000 in 2006, $1,034,000 in 2005, and $505,000 in
2004. The increase in 2006 compared to 2005 is principally due to an increase in
the aggregate amount of cash equivalents and investment  securities invested for
the full year of 2006, as a result of the cash  proceeds  received in connection
with the July  2005  sale of real  estate  owned,  and to a  lesser  extent,  an
increased yield on investments  due to rising  interest  rates.  The increase in
2005 compared to 2004 is principally due to an increase in the aggregate  amount
of cash equivalents and investment  securities  invested as a result of the cash
proceeds received in connection with the sale of real estate owned in July 2005,
and to a lesser extent, an increased yield on investments due to rising interest
rates.

     During  2006,  2005,  and  2004  realized  gains  on  sales  of  investment
securities available for sale were $45,000,  $20,000, and $747,000 respectively.
The  increase in 2004 is the result of a higher level of  investment  securities
available for sale and realization of gains on sales due to market appreciation.

     Other  expense  of  $1,100,000  for 2006 is  attributable  to a payment  in
October 2006 for the  settlement of claims as more fully  described in Part II -
Item 8 - Note  10 to the  Company's  consolidated  financial  statements.  Other
income of $400,000  for the year ended  December 31, 2006,  is  attributable  to
receipt of insurance  proceeds  received.  See Part II - Item 8 - Note 10 to the
Company's consolidated financial statements for further information.



<PAGE>
     Other income of $1,273,000 in 2006 consists of $1,201,000  attributable  to
an IRS interest  refund,  consented to by the IRS in December 2006, and received
by the  Company in January  2007.  The IRS refund  resulted  from the  Company's
pursuit of interest  refund  claims for several prior tax years under a tax code
provision   which  allowed  for  the   retroactive   recovery  of  the  interest
differential where a taxpayer had a tax underpayment (subject to higher interest
payment rates) for one tax year and a simultaneous  tax overpayment  (subject to
lower interest  refund rates) for another tax year. The Company is continuing to
pursue similar claims from several other tax years,  but at the current time the
Company  can  give no  assurances  as to the  final  amounts  of any  additional
interest refunds, if any, or when they might be received. The additional $72,000
of other  income  is  attributable  to  settlement  proceeds  received  from the
litigation with SDG, Inc. The Company remains a shareholder in SDG and AMDG, but
has no current  carrying value for this  investment,  as the Company's  original
cost basis was previously written off.

     As noted above herein, during the year ended December 31, 2006, the Company
recorded various amounts of other  non-recurring  other income and other expense
from  various   sources  and  matters.   The  net  aggregate   amount  of  these
non-recurring items resulted in the recognition of other income of $573,000, for
the year ended December 31, 2006.

     The income tax provisions of $132,000 for the year ended December 31, 2006,
is  attributable  to a  provision  for a minimum  tax on capital to the state of
Connecticut.  The income tax provision for continuing  operations of $95,000 for
the year ending  December 31, 2005, is attributable to a provision for a minimum
tax on capital to the state of Connecticut.  The Company  utilized net operating
loss ("NOL") carryforwards and alternative minimum tax ("AMT") NOL carryforwards
which were  available to offset  taxable  income  generated from the sale of Two
Soundview  as  discussed  in Part II - Item 8 - Notes 9 and 13 to the  Company's
consolidated  financial  statements.  Due to  limitations  on the  amount of NOL
carryforwards  that can be  utilized  against  taxable  income,  the  income tax
provision of $400,000 for  discontinued  operations  for the year ended December
31, 2005, is attributable to a provision for federal  alternative minimum tax of
$150,000 and a provision of $250,000 for Connecticut state taxes.

     The  income  tax  provision  of  $120,000  for the year  2004 is  primarily
attributable  to a  provision  for a  minimum  tax on  capital  to the  state of
Connecticut.

     A  reconciliation  between income taxes  computed at the statutory  federal
rate and the provision for income taxes is included in Part II - Item 8 - Note 9
to the Company's consolidated financial statements.

     Discontinued Operations

     As  further  discussed  in  Part  II - Item  8,  Note  13 to the  Company's
consolidated financial statements,  the Company sold Two Soundview in July 2005.
The sale  price was  $28,000,000  less  normal  real  estate  closing  costs and
adjustments.  A gain from the sale of  $10,298,000 is reflected in the Company's
financial statements for the year ended December 31, 2005.

     Income from discontinued operations before gain on disposition was $749,000
for the year ended  December 31, 2005,  which reflects the results of operations
for Two Soundview for the period  through July 15, 2005 (date of sale).  For the
full year 2004, income from discontinued operations was $1,345,000.

     TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
<TABLE>
<CAPTION>
<S>                                              <C>        <C>        <C>            <C>            <C>
(in thousands)                                                     Payment Due By Period
                                                 ==========================================================
                                                          Less Than      One to      Three to      More than
                                                  Total   One Year    Three Years   Five Years    Five Years
Operating leases............................    $    8    $      8    $        -    $        -    $        -
                                                -------   --------    ----------    ----------    ----------
Total obligations...........................    $    8    $      8    $        -    $        -    $        -
                                                =======   ========    ==========    ==========    ==========
</TABLE>
     See  Part  II - Item 8 - Note  7 to the  Company's  consolidated  financial
statements for  information  regarding the anticipated  Supplemental  Retirement
Plan lump-sum  benefit  payment of  $16,676,115  (to Mr.  Bianco,  the Company's
Chairman,  President  and Chief  Executive  Officer),  expected to be paid on or
about May 31, 2007.


<PAGE>
     APPLICATION OF CRITICAL ACCOUNTING POLICIES

     Our  consolidated  financial  statements  are  based on the  selection  and
application of accounting  principles generally accepted in the United States of
America,  which require us to make estimates and assumptions about future events
that  affect  the  amounts   reported  in  our  financial   statements  and  the
accompanying  notes.  Future events and their effects cannot be determined  with
absolute  certainty.  The  determination  of estimates  requires the exercise of
judgment.  Actual  results  could  differ  from  those  estimates,  and any such
differences  may be material to the  financial  statements.  We believe that the
following accounting policies, which are important to our financial position and
results of  operations,  require a higher  degree of judgment and  complexity in
their  application  and represent the critical  accounting  policies used in the
preparation of our financial statements.  If different assumptions or conditions
were to prevail,  the results  could be materially  different  from our reported
results. For a summary of all our accounting policies,  including the accounting
policies  discussed  below,  see  Part  II - Item  8 -  Note 2 to the  Company's
consolidated financial statements.

     Supplemental   Retirement  Plan:  Our  Supplemental  Retirement  Plan  (the
"Supplemental  Plan")  accrued  liability and benefit costs are developed on the
basis  of  actuarial  calculations.  Inherent  in  these  calculations  are  key
assumptions including discount rates, actuarially determined mortality tables, a
retirement/payment  date  assumption,  form of benefit  payment  such as annuity
versus lump-sum,  and projected  future earnings.  The assumptions are typically
reviewed on an annual basis at the  beginning  of each year.  We are required to
consider  current market  conditions,  including  changes in interest  rates, in
making these  assumptions.  Material  changes in our accrued  Supplemental  Plan
liability and annual costs may occur in the future due to changes in assumptions
or experience  different than that assumed.  The Supplemental  Plan liability is
not funded.  In accordance with GAAP, the December 31, 2006,  Supplemental  Plan
liability  reflects the present value of the  anticipated  May 31, 2007 lump-sum
payment amount of  $16,676,115,  utilizing a 5.75% discount rate factor based on
the 2007  Employment  Agreement  between  the  Company  and Mr.  Bianco  and the
amendment of the  Supplemental  Plan as further  described in Part II - Item 8 -
Note 7 to the Company's consolidated financial statements.

     In connection with the Board of Director's determination that the Company's
Supplemental  Plan is to terminate  automatically  following  the payment to Mr.
Bianco of his lump-sum benefit of $16,676,115 on or about May 31, 2007 (the date
on which Mr. Bianco's current employment  agreement with the Company will expire
by its terms), the Personnel Committee's agreement with Mr. Bianco to extend his
employment  with the  Company for an  additional  five (5) years with no further
Supplemental Plan accruals, and the Company's amendment to the Supplemental Plan
to provide for the payment to Mr. Bianco of his Supplemental  Plan benefit on or
about May 31, 2007, certain assumptions and the basis utilized by the Company in
developing the Supplemental  Plan 2006 benefit costs and accrued  liability were
changed  from  those  utilized  in prior  years.  The 2006  assumptions,  versus
assumptions  in 2005 are as  follows:  (i) we have  assumed  that  Mr.  Bianco's
Supplemental   Plan  benefit  (Mr.  Bianco  is  the  sole   participant  in  the
Supplemental  Plan) will be paid in a lump-sum,  versus the  assumption  made in
prior  years that  annuity  payments  would be made;  (ii) we have  assumed  Mr.
Bianco's  Supplemental  Plan  benefit  entitlement  date to be May 31, 2007 (his
current  employment  contract  expiration  date  and the  date on or  about  his
Supplemental  Plan lump-sum benefit payment is to be paid),  versus December 30,
2007 (age 60) in prior  years;  and (iii) we have  projected  that Mr.  Bianco's
total  compensation in 2006 and 2007 for the  calculation of  Supplemental  Plan
benefits   will  not  increase  the  average  of  the  three  highest  years  of
compensation  previously  earned under the  Supplemental  Plan, as Mr.  Bianco's
Final Average  Earnings (as defined in the  Supplemental  Plan) for Supplemental
Plan  benefit  calculation  purposes  is  capped as of  December  31,  2004.  In
addition,  a 5.75%  discount  rate and a "RP-2000"  projected to 2004  mortality
table were utilized in 2006, versus a 5.50% discount rate and the same mortality
table utilized in 2005.

     The 5.50%  discount rate,  (utilized for the 2005 actuarial  calculations),
was  consistent  with Moody's Aa bond index rate at December 31, 2005. The 5.75%
discount  rate  being  utilized  for 2006 is the  discount  rate to be  utilized
pursuant to the agreement  noted above.  The  mortality  table for 2006 and 2005
reflects  an up to  date  mortality  table,  which  is  being  utilized  for the
calculation of Mr. Bianco's Supplemental Plan lump-sum benefit payment, pursuant
to the agreements noted above.

     See Financial Condition and Liquidity, above, and Part II - Item 8 - Note 7
to the Company's consolidated  financial statements,  for additional information
with regard to the Supplemental Plan.



<PAGE>
     Legal  Proceedings:  From time to time the Company and its subsidiaries may
be  named as a  defendant  in  various  lawsuits  or  proceedings.  The  Company
presently is not aware of any pending or threatened  litigation which could have
a material adverse effect on the  consolidated  financial  statements  presented
herein.  Management  of the Company in  consultation  with outside legal counsel
continually  reviews the likelihood of liability and associated costs of pending
and  threatened  litigation  including  the  basis  for the  calculation  of any
litigation  reserves  which may be  necessary.  The  assessment of such reserves
includes an exercise of judgment and is a matter of opinion. The Company intends
to aggressively contest all threatened litigation and contingencies,  as well as
pursue all  sources  for  contributions  to  settlements.  For a  discussion  of
lawsuits and proceedings, see Part II - Item 8 - Note 10.

     Income Tax Audits: The Company's federal, state and local tax returns, from
time to time,  may be  audited by the tax  authorities,  which  could  result in
proposed assessments or a change in the net operating loss ("NOL") carryforwards
currently  available.  The  Company's  federal  income tax returns for the years
subsequent to 1992 have not been reviewed by the Internal Revenue  Service.  The
accrued amounts for income taxes reflects  management's  best judgment as to the
amounts payable for all open tax years.

     Deferred Tax Assets:  As of December 31, 2006, the Company had deferred tax
assets arising  primarily from net operating loss  carryforwards and alternative
minimum tax credits  available to offset  taxable  income in future  periods.  A
valuation  allowance has been  established for the entire net deferred tax asset
of $31 million,  as  management,  at the current time,  has no basis to conclude
that realization is more likely than not. The valuation allowance was calculated
in  accordance  with the  provisions  of Financial  Accounting  Standards  Board
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes" ("SFAS 109"), which places primary  importance on a company's  cumulative
operating  results for the current and preceding  years. We intend to maintain a
valuation  allowance for the entire deferred tax asset until sufficient positive
evidence exists to support a reversal. See Part II - Item 8 - Note 9.

     New  Accounting  Pronouncements:  In July 2006,  the  Financial  Accounting
Standards Board ("FASB") released FASB  Interpretation  No. 48,  "Accounting for
Uncertainty  in Income Taxes - an  Interpretation  of FASB  Statement 109" ("FIN
48"),  which clarifies the accounting for uncertainty in income taxes recognized
in  companies'  financial  statements  in accordance  with FASB  Statement  109,
"Accounting  for Income  Taxes." FIN 48 prescribes a  recognition  threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return.  The evaluation of
a  tax  position  will  be  sustained  upon  examination.  The  second  step  is
measurement   whereby  a  tax  position  that  meets  the   more-likely-than-not
recognition  threshold  is  measured  to  determine  the  amount of  benefit  to
recognize  in  the  financial  statements.  FIN 48  also  provides  guidance  on
derecognition threshold of recognized tax benefits, classification, interest and
penalties,  accounting in interim periods,  disclosure and transition. FIN 48 is
effective for fiscal years  beginning  after December 15, 2006. The Company will
adopt  the new  requirements  in the  first  quarter  of 2007  and is  currently
evaluating the impact that the adoption of FIN 48 will have on its  consolidated
financial statements.

     In  September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards No. 158, "Employer's  Accounting for Defined Benefit Pension and Other
Postretirement  Plans,  an  Amendment  of SFAS No. 87, 88, 106 and 132R"  ("SFAS
158").  SFAS 158  requires an  employer to (i)  recognize  in its  statement  of
financial position an asset for a plan's over funded status or a liability for a
plan's under funded  status;  (ii) measure a plan's  assets and its  obligations
that  determine  its funded status as of the end of the  employer's  fiscal year
(with limited exceptions); and (iii) recognize changes in the funded status of a
defined  benefit  postretirement  plan in the year in which the  changes  occur.
Those changes will be reported in comprehensive income of a business entity. The
requirement  to recognize the funded status of a benefit plan and the disclosure
requirements  are  effective  as of the  end of the  fiscal  year  ending  after
December 15, 2006, for entities with publicly traded equity  securities,  and at
the end of the fiscal year ending after June 15, 2007,  for all other  entities.
The requirement to measure plan assets and benefit obligations as of the date of
the employer's fiscal year-end  statement of financial position is effective for
fiscal years ending after December 15, 2008. We do not believe that the adoption
of SFAS 158 will have a material effect on the Company's  consolidated financial
statements as the Company intends to terminate its Supplemental  Retirement Plan
(the "Supplemental Plan") on or about May 31, 2007, as further discussed in Part
II - Item 8 - Note 7. The Company will continue to recognize an expense  through
to the  date on  which  the  Supplemental  Plan  will  terminate.  The  ultimate
liability  related  to the final  termination  of the  Supplemental  Plan is not
reflected as all conditions for the final  termination of the Supplemental  Plan
have not yet been met.


<PAGE>
     In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement No. 157, Fair Value  Measurements  ("SFAS 157"). SFAS 157 defines fair
value,  establishes  a framework for  measuring  fair value in  accordance  with
accounting  principals  generally  accepted  in the  United  States  of  America
("GAAP") and expands disclosure  requirements regarding fair value measurements.
SFAS 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years.  Earlier
application is encouraged, provided that the reporting entity has not yet issued
financial statements for such fiscal year, including financial statements for an
interim  period within such fiscal year. The Company is evaluating the impact of
the adoption of SFAS 157 on its financial statements.

     In February 2007, the FASB issued  Statement No. 159, The Fair Value Option
for Financial  Assets and Financial  Liabilities  Including an amendment of FASB
Statement No. 115 ("SFAS 159").  SFAS 159 permits  entities to choose to measure
many  financial  instruments  and  certain  other  items  at fair  value  and is
effective as of the beginning of an entity's first fiscal year that begins after
November 15, 2007.  Early  adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the  provisions  of SFAS  157.  No  entity  is  permitted  to apply the
Statement  retrospectively  to fiscal years  preceding the effective date unless
the entity chooses early  adoption.  The Company is evaluating the impact of the
adoption of SFAS 159 on its financial statements.

     Cautionary Statement for Forward-Looking Information

     This Annual Report together with other statements and information  publicly
disseminated  by the  Company  may contain  certain  forward-looking  statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the  Securities  Exchange  Act of 1934,  as amended.  The Company
intends  such  forward-looking  statements  to be  covered  by the  safe  harbor
provisions for  forward-looking  statements  contained in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are inherently subject
to risks and uncertainties, many of which cannot be predicted or quantified. The
forward-looking  statements may relate to such matters as anticipated  financial
performance,   future  revenues  or  earnings;  business  prospects,   projected
ventures, anticipated market performance,  anticipated litigation results or the
timing of pending  litigation,  and  similar  matters.  When used in this Annual
Report, the words "estimates,"  "expects,"  "anticipates,"  "believes," "plans,"
"intends" and variations of such words and similar  expressions  are intended to
identify forward-looking statements that involve risks and uncertainties.  These
risks  and  uncertainties,  many of which  are  beyond  the  Company's  control,
include,  but are not limited to those set forth in "Item 1A, Risk  Factors" and
elsewhere in this Annual Report and in the Company's  other public  filings with
the  Securities  and  Exchange  Commission  including,  but not  limited to: (i)
transaction  volume  in the  securities  markets,  (ii)  the  volatility  of the
securities markets, (iii) fluctuations in interest rates, (iv) risks inherent in
the real  estate  business,  including,  but not limited  to,  tenant  defaults,
changes in  occupancy  rates or real estate  values,  (v) changes in  regulatory
requirements  which  could  affect  the cost of  doing  business,  (vi)  general
economic  conditions,  (vii)  changes in the rate of  inflation  and the related
impact on the securities markets,  (viii) changes in federal and state tax laws,
and (ix) risks  arising  from  unfavorable  decisions in the  Company's  current
material  litigation  matters,  or  unfavorable  decisions in other  supervisory
goodwill cases.

     Undue reliance  should not be placed on these  forward-looking  statements,
which are  applicable  only as of the date  hereof.  The Company  undertakes  no
obligation  to revise or update  these  forward-looking  statements  to  reflect
events or  circumstances  that arise after the date of this Annual  Report or to
reflect  the  occurrence  of  unanticipated  events.  Accordingly,  there  is no
assurance that the Company's expectations will be realized.



<PAGE>
     ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company holds  short-term  investments  as a source of  liquidity.  The
Company's  interest rate  sensitive  investments  at December 31, 2006 and 2005,
with maturity dates of less than one year consist of the following:
<TABLE>
<CAPTION>
<S>                                                            <C>            <C>            <C>             <C>
                                                                      2006                       2005
(in thousands)                                              =========================   ===========================
                                                             Carrying       Fair           Carrying         Fair
                                                              Value         Value           Value          Value
                                                            ----------- -----------      ------------    ----------

U.S. Treasury Bills and Notes........................        $ 34,623       $ 34,625        $ 39,031      $  39,034
                                                             ========       ========        ========      =========
Weighted average interest rate.......................           4.65%                           3.81%
                                                             ========                       ========
</TABLE>
     The Company's  current  policy is to minimize the interest rate risk of its
short-term  investments by investing in U.S.  Treasury Bills with  maturities of
less than one year. There were no significant changes in market exposures or the
manner in which interest rate risk is managed during the year.

     The Company's  portfolio of equity  securities has exposure to equity price
risk. Equity price risk is defined as the potential loss in fair value resulting
from an adverse  change in prices.  The equity  securities  are primarily in the
form of preferred stock in utility companies. The equity securities are held for
an indefinite period, are accounted for as available for sale securities and are
carried at fair value with net unrealized gains and losses recorded  directly in
a separate component of other comprehensive income (loss).

     The table below  summarizes  the Company's  equity price risk and shows the
effect of a  hypothetical  20% increase and a 20% decrease in market price as of
the  dates  indicated   below.  The  selected   hypothetical   changes  are  for
illustrative  purposes  only and are not  necessarily  indicative of the best or
worse case scenarios.
<TABLE>
<CAPTION>
<S>                                                                        <C>               <C>

(in thousands)
                                                                        12/31/2006        12/31/2005
Equity Securities Available for Sale:                                   ==========        ==========

Fair value.............................................................$      1,417     $      1,729
                                                                       ============     ============
Hypothetical fair value at a 20% increase in market price..............$      1,700     $      2,075
                                                                       ============     ============
Hypothetical fair value at a 20% decrease in market price..............$      1,134     $      1,393
                                                                       ============     ============
</TABLE>




<PAGE>
     ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Board of Directors
and Stockholders of
AmBase Corporation

     In our opinion, the accompanying  consolidated balance sheets listed in the
index appearing under Item 15(a) (1) and the related  consolidated  statement of
operations,  comprehensive  income (loss),  changes in stockholders'  equity and
cash flows present fairly, in all material  respects,  the financial position of
AmBase  Corporation  and its  subsidiaries at December 31, 2006 and 2005 and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 2006 in  conformity  with  accounting  principles
generally accepted in the United States of America. In addition, in our opinion,
the financial  statement schedule listed in the index appearing under Item 15(a)
(2) presents fairly, in all material respects, the information set forth therein
when read in conjunction  with the related  consolidated  financial  statements.
These   financial   statements   and  financial   statement   schedule  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these  financial  statements  based on our audits.  We conducted  our
audits of these  statements  in  accordance  with the  standards  of the  Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.




/s/ PricewaterhouseCoopers LLP
New York, New York
March 27, 2007



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Operations
                             Years Ended December 31
<TABLE>
<CAPTION>
<S>                                                                         <C>             <C>                 <C>

(in thousands, except per share data)                                       2006             2005              2004
                                                                            ====             ====              ====
Revenues:
Rental income.................................................       $        92      $       170      $        176

Operating expenses:
Compensation and benefits.....................................             4,778            4,212             4,150
Professional and outside services.............................             2,655            2,003             1,422
Property operating and maintenance............................               123              124               102
Depreciation..................................................                51               51                50
Insurance.....................................................                80               79                90
Other operating...............................................               200              179               190
                                                                     -----------      -----------      ------------
                                                                           7,887            6,648             6,004
                                                                     -----------      -----------      ------------
Operating loss................................................            (7,795)          (6,478)           (5,828)
                                                                     -----------      -----------      ------------
Interest income...............................................             1,846            1,034               505
Other expense, claims settlement..............................            (1,100)               -                 -
Other income, insurance recovery..............................               400                -                 -
Realized gains of the sales of investment securities
  available for sale..........................................                45               20               747
Other income..................................................             1,273                -                 -
                                                                     -----------      -----------      ------------
Loss from continuing operations before income taxes...........            (5,331)          (5,424)           (4,576)
Income tax expense on continuing operations...................              (132)             (95)             (120)
                                                                     -----------      -----------      ------------
Loss from continuing operations...............................            (5,463)          (5,519)           (4,696)
                                                                     -----------      -----------      ------------
Income from operation of discontinued operations..............                 -              749             1,345
Gain on disposition...........................................                 -           10,298                 -
Income tax expense on discontinued operations.................                 -             (400)                -
                                                                     -----------      -----------      ------------
Income from discontinued operations...........................                 -           10,647             1,345
                                                                     -----------      -----------      ------------
Net income (loss).............................................       $    (5,463)     $     5,128      $     (3,351)
Per share data:                                                      ===========      ===========      ============
Basic:
Loss from continuing operations...............................       $     (0.12)     $     (0.12)     $     (0.10)
Income from discontinued operations...........................                 -             0.23              0.03
                                                                     -----------      -----------      ------------
Net income (loss) attributable to common stockholders.........       $     (0.12)     $      0.11      $      (0.07)
                                                                     ===========      ===========      ============
Assuming dilution:
Loss from continuing operations...............................       $     (0.12)     $     (0.12)     $      (0.10)
Income from discontinued operations...........................                 -             0.23              0.03
                                                                     -----------      -----------      ------------
Net income (loss) attributable to common stockholders.........             (0.12)            0.11             (0.07)
                                                                     ===========      ===========      ============
Weighted average common shares outstanding:
Basic.........................................................            45,327           46,234            46,225
                                                                     ===========      ===========      ============
Assuming dilution.............................................            45,327           46,234            46,225
                                                                     ===========      ===========      ============
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                          Consolidated Balance Sheets
                                December 31
<TABLE>
<CAPTION>
<S>                                                                                          <C>                <C>


(in thousands, except for share and per share amounts)                                       2006              2005
                                                                                             ====              ====
Assets:
Cash and cash equivalents.......................................................      $     2,601      $      2,852
Investment securities:
    Held to maturity (market value $34,625 and $39,034, respectively)...........           34,623            39,031
    Available for sale, carried at fair value...................................            1,417             1,729
                                                                                      -----------      ------------
Total investment securities.....................................................           36,040            40,760
                                                                                      -----------      ------------
Real estate owned:
    Land........................................................................              554               554
    Buildings...................................................................            1,900             1,900
                                                                                      -----------      ------------
                                                                                            2,454             2,454
    Less:  Accumulated depreciation ............................................             (283)             (232)
                                                                                      -----------      ------------
Real estate owned, net..........................................................            2,171             2,222
                                                                                      -----------      ------------
Other assets....................................................................            1,336                49
                                                                                      -----------      ------------
Total assets....................................................................      $    42,148      $     45,883
                                                                                      ===========      ============
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and accrued liabilities........................................      $     1,171      $      1,568
Supplemental retirement plan....................................................           16,282            14,595
Other liabilities...............................................................               28                38
                                                                                      -----------      ------------
Total liabilities...............................................................           17,481            16,201
                                                                                      -----------      ------------
Commitments and contingencies...................................................                -                 -
                                                                                      -----------      ------------
Stockholders' equity:
Common stock ($0.01 par value, 200,000,000 authorized, 46,410,007 issued
   and 44,968,519 outstanding in 2006 and 46,233,519 outstanding in 2005).......              464               464
Paid-in capital.................................................................          548,044           547,956
Accumulated other comprehensive loss............................................             (336)           (1,395)
Accumulated deficit.............................................................         (522,121)         (516,658)
Treasury stock, at cost - 1,441,488 and 176,488 shares, respectively............           (1,384)             (685)
                                                                                      -----------      ------------
Total stockholders' equity......................................................           24,667            29,682
                                                                                      -----------      ------------
Total liabilities and stockholders' equity......................................      $    42,148      $     45,883
                                                                                      ===========      ============
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.


<PAGE>
<TABLE>
<CAPTION>
                                                  AMBASE CORPORATION AND SUBSIDIARIES
                                       Consolidated Statements of Changes in Stockholders' Equity



<S>                               <C>           <C>              <C>               <C>                  <C>          <C>



                                                           Accumulated other
(in thousands)                  Common         Paid-in      comprehensive         Accumulated         Treasury
                                 stock         capital      income (loss)           deficit            stock         Total
                                =======      =========      =============      =================       =======       =====
December 31, 2003............  $     463     $  547,940     $            84       $    (518,435)    $      (685) $   29,367

Net loss.....................          -              -                   -              (3,351)             -       (3,351)
Stock options exercised......          1             16                   -                   -              -          17
Other comprehensive
  loss.......................          -              -                (459)                  -              -        (459)
                                --------      ---------       -------------       -------------      ----------   ---------
December 31, 2004............        464        547,956                (375)           (521,786)          (685)     25,574
                                --------      ---------       -------------       -------------      ----------   ---------
Net income...................          -              -                   -               5,128              -       5,128
Other comprehensive
  loss.......................          -              -              (1,020)                   -             -      (1,020)
                               ---------      ---------       -------------       -------------      ---------     --------
December 31, 2005............  $     464     $  547,956       $      (1,395)      $    (516,658)    $     (685)  $   29,682
                               =========      =========       =============        ============       ========     ========
Net loss.....................          -              -                                  (5,463)            -       (5,463)
Stock-based compensation.....          -             88                   -                   -             -           88
Common stock
  repurchased................          -              -                   -                   -           (699)       (699)
Other comprehensive
  income.....................          -              -               1,059                   -              -       1,059
                               ---------   ------------       -------------        ------------       --------     --------

December 31, 2006............  $     464     $  548,044     $          (336)      $    (522,121)    $   (1,384) $   24,667
                               =========     ==========       =============        ============       =========    ========
</TABLE>

     The accompanying notes are an integral part of these consolidated financial
statements.

<TABLE>
<CAPTION>

                       AMBASE CORPORATION AND SUBSIDIARIES
             Consolidated Statements of Comprehensive Income (Loss)
                             Years Ended December 31
                                 (in thousands)
<S>                                                                                    <C>             <C>            <C>
                                                                                        2006            2005         2004
                                                                                       ======          ======       ======
Net income (loss)..........................................................         $  (5,463)    $   5,128      $  (3,351)

Minimum pension liability adjustment, net of tax effect of $0..............               852          (914)          (412)

Unrealized holding gains (losses) on investment securities - available for sale,
       net of tax effect of $0.............................................               207          (106)           (47)
                                                                                    ---------     ---------      ---------
Comprehensive income (loss)................................................         $  (4,404)    $   4,108      $  (3,810)
                                                                                    =========     =========      =========
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.



<PAGE>
<TABLE>
<CAPTION>
                       AMBASE CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                             Years Ended December 31
<S>                                                                                 <C>               <C>             <C>
(in thousands)                                                                       2006             2005           2004
                                                                                     ====             ====           ====
Cash flows from operating activities:
Loss from continuing operations..........................................        $ (5,463)       $  (5,519)    $   (4,696)
Adjustments to reconcile loss from continuing operations to net cash used by
     continuing operations:
    Accretion of discount - investment securities........................             (53)            (575)          (115)
    Depreciation and amortization........................................              51               51             50
    Realized gains on investment securities available for sale...........             (45)             (20)          (747)
Stock-based compensation expense.........................................              88                -              -
Amortization of minimum pension liability................................             852                -              -
Changes in other assets and liabilities:
    Accrue interest receivable...........................................             (33)               -              -
    Accounts receivable..................................................               -                1              -
    Other assets.........................................................          (1,197)             426           (454)
    Accounts payable and accrued liabilities.............................            (397)              73            119
    Supplemental Plan and other liabilities..............................           1,677              233          2,440
Other, net...............................................................               1                2             (2)
                                                                                ---------          -------        -------
Net cash used by continuing operating activities.........................          (4,519)          (5,328)        (3,405)
                                                                                ---------          -------        -------
Income from discontinuing operations....................................                -           10,647          1,345
Adjustments to reconcile income from discontinued operations to net cash
provided by discontinued operations:
    Gain from sale of discontinued operations...........................                -          (10,298)             -
    Depreciation and amortization related to discontinued operations....                -              140            280
Changes in other assets and liabilities related to discontinued operations:
    Other assets & other liabilities....................................                -             (305)          (116)
                                                                                ---------          -------        -------
Net cash provided by discontinued operations............................                -              184          1,509
                                                                                ---------          -------        -------
Net cash used by operating activities...................................           (4,519)          (5,144)        (1,896)
                                                                                ---------          -------        -------
Cash flows from investing activities:
Maturities of investment securities - held to maturity...................         106,561           81,627         25,894
Purchases of investment securities - held to maturity....................        (102,158)        (111,493)       (17,040)
Purchases of investment securities - available for sale..................               -             (252)       (17,426)
Sales of investment securities - available for sale......................             564              548         17,790
Proceeds from sale of real estate owned..................................               -           27,442              -
                                                                                  -------         --------        -------
Net cash provided (used) by investing activities.........................           4,967           (2,128)         9,218
                                                                                  -------         --------        -------
Cash flows from financing activities:
Stock options exercised..................................................               -                -             17
Common stock repurchased.................................................            (699)               -              -
                                                                                  -------         --------        -------
Net cash (used) provided by financing activities.........................            (699)               -             17
                                                                                  -------         --------        -------
Net (decrease) increase in cash and cash equivalents.....................            (251)          (7,272)         7,339
Cash and cash equivalents at beginning of year...........................           2,852           10,124          2,785
                                                                                  -------         --------        -------
Cash and cash equivalents at end of year.................................         $ 2,601         $  2,852        $10,124
                                                                                  =======         ========        =======
Supplemental cash flow disclosure:
Income taxes paid........................................................         $   492         $    100        $   162
                                                                                  =======         ========        =======
</TABLE>
     The accompanying notes are an integral part of these consolidated financial
statements.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

     Note 1 - Organization

     AmBase  Corporation  (the "Company") is a holding company which,  through a
wholly  owned  subsidiary,  owns a  commercial  office  building  in  Greenwich,
Connecticut and a 6.3% ownership  interest in SDG, Inc.  ("SDG"),  a development
stage pharmaceutical  company. The Company previously owned an insurance company
and a savings bank.

     In February  1991,  the  Company  sold its  ownership  interest in The Home
Insurance  Company  ("The  Home") and its  subsidiaries.  On  December  4, 1992,
Carteret  Savings Bank, FA ("Carteret") was placed in receivership by the Office
of Thrift Supervision ("OTS").

     The Company's  main source of operating  revenue is rental income earned on
real estate  owned.  The Company also earns  non-operating  revenue  principally
consisting of interest earned on investment securities and cash equivalents. The
Company continues to evaluate a number of possible acquisitions,  and is engaged
in the  management  of its  assets and  liabilities,  including  the  contingent
assets, as described in Notes 9 and 10.

     In July 2005,  the  Company  completed  the sale of its 38,000  square foot
office  building  at  Two  Soundview  Drive  in  Greenwich,   Connecticut  ("Two
Soundview").  Accordingly,  the results of operations of Two Soundview have been
retroactively  reclassified  as  discontinued  operations  in  the  accompanying
Consolidated  Statement of  Operations  for the periods  presented in accordance
with Financial  Accounting  Standards Board,  Statement of Financial  Accounting
Standards  No. 144,  "Accounting  for the  Impairment  or Disposal of Long-Lived
Assets" ("SFAS 144"). See Note 13 for additional information.

     Note 2 - Summary of Significant Accounting Policies

     The consolidated financial statements have been prepared in accordance with
accounting  principles  generally  accepted  in the  United  States  of  America
("GAAP").

     Use of estimates in the preparation of financial statements:

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the United States of America ("GAAP") requires
management to make estimates and  assumptions,  that it deems  reasonable,  that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from such estimates and assumptions.

     Principles of consolidation:

     The consolidated  financial statements are comprised of the accounts of the
Company  and  its  majority  owned  subsidiaries.   All  material   intercompany
transactions and balances have been eliminated.

     Cash and cash equivalents:

     Highly  liquid  investments,   consisting  principally  of  funds  held  in
short-term  money market accounts,  with original  maturities of less than three
months, are classified as cash equivalents.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

     Investment securities:

     Securities  that the  Company has both the  positive  intent and ability to
hold to maturity are classified as investment  securities - held to maturity and
are carried at amortized cost. Investment securities - available for sale, which
are those  securities  that may be sold prior to  maturity,  are carried at fair
value, with any net unrealized gains or losses reported in a separate  component
of other comprehensive income (loss), net of taxes.

     Interest and  dividends on  investment  securities  are  recognized  in the
Consolidated  Statement of Operations when earned.  Realized gains and losses on
the sale of investment  securities - available for sale are calculated  using an
average cost basis for determining  the cost basis of the  securities.  The fair
value of publicly  traded  investment  securities  is determined by reference to
current market quotations.

     The Company  continually  reviews its  investments  to determine  whether a
decline in fair  value  below the cost  basis is other  than  temporary.  If the
decline in fair value is judged to be other  than  temporary,  the cost basis of
the  security is written  down to fair market  value and the amount of the write
down is included in the Consolidated Statement of Operations.

     Income taxes:

     The Company  and its  domestic  subsidiaries  file a  consolidated  federal
income tax return.  The Company  recognizes  both the current and  deferred  tax
consequences  of all  transactions  that have been  recognized  in the financial
statements,  calculated  based on the provisions of enacted tax laws,  including
the tax rates in effect for current and future  years.  Net  deferred tax assets
are  recognized  immediately  when a more likely than not criterion is met; that
is, a greater than 50% probability exists that the tax benefits will actually be
realized sometime in the future. At the present time, management has no basis to
conclude that  realization  is more likely than not and a valuation  reserve has
been recorded against net deferred tax assets.

     Earnings per share:

     Basic  earnings  per share  ("EPS")  excludes  dilution  and is computed by
dividing income (loss) from continuing operations by the weighted average number
of common shares outstanding for the period.  Diluted EPS reflects the potential
dilution  of EPS  that  could  occur  if  options  to issue  common  stock  were
exercised.

     Stock-based compensation:

     Under the  Company's  1993  Stock  Incentive  Plan (the "1993  Plan"),  the
Company may grant to officers and employees of the Company and its subsidiaries,
stock options ("Options"),  stock appreciation rights ("SARs"), restricted stock
awards ("Restricted Stock"), merit awards ("Merit Awards") and performance share
awards ("Performance  Shares"),  through May 28, 2008. An aggregate of 5,000,000
shares of the  Company's  Common Stock are reserved for issuance  under the 1993
Plan (upon the exercise of Options and Stock Appreciation Rights, upon awards of
Restricted  Stock  and  Performance  Shares);  however,  of  such  shares,  only
2,500,000 shares in the aggregate shall be available for issuance for Restricted
Stock  Awards and Merit  Awards.  Such shares shall be  authorized  but unissued
shares of Common  Stock.  Options  may be granted  as  incentive  stock  options
("ISOs")  intended to qualify for favorable tax treatment  under Federal tax law
or as nonqualified stock options ("NQSOs").  SARs may be granted with respect to
any  Options  granted  under  the 1993 Plan and may be  exercised  only when the
underlying Option is exercisable. The 1993 Plan requires that the exercise price
of all Options and SARs be equal to or greater than the fair market value of the
Company's Common Stock on the date of grant of that Option.  The term of any ISO
or related SAR cannot  exceed ten years from the date of grant,  and the term of
any NQSO cannot  exceed ten years and one month from the date of grant.  Subject
to the terms of the 1993 Plan and any  additional  restrictions  imposed  at the
time of grant,  Options and any related SARs ordinarily will become  exercisable
commencing  one year  after  the date of  grant.  In the  case of a  "Change  of
Control" of the Company (as defined in the 1993 Plan),  Options granted pursuant
to the 1993 Plan may become fully exercisable as to all optioned shares from and
after the date of such Change in Control in the  discretion  of the Committee or
as  may  otherwise  be  provided  in  the  grantee's  Option  agreement.  Death,
retirement, or absence for disability will not result in the cancellation of any
Options.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

     Effective  January 1, 2006, the Company adopted the fair value  recognition
provisions  of  Statement  of Financial  Accounting  Standards  No. 123 (revised
2004),  "Share-Based  Payment,"  ("SFAS 123R"),  using the modified  prospective
approach and therefore has not restated  results for prior  periods.  Under this
method, stock-based compensation expense for the year ended

     December  31,  2006,  includes  compensation  expense  for all  stock-based
compensation  awards granted prior to, but not yet vested as of January 1, 2006,
based on the grant date fair value  estimated  in  accordance  with the original
provisions of Statement of Financial  Accounting  Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS123").  Stock-based compensation expense for
all  stock-based  compensation  awards  granted after January 1, 2006, for which
vesting is based solely on employment  service,  will be based on the grant date
fair value estimated in accordance with the provisions of SFAS 123R. The Company
recognizes these compensation costs for only those shares expected to vest, on a
straight-line  basis over the requisite  service  period of the award,  which is
generally the option vesting term of two years.  See Note 8 herein for a further
discussion of stock-based compensation.

     During the year ended December 31, 2006, the Company recorded  compensation
expense of $88,000  relating to unvested  stock  options.  Compensation  expense
relating  to  stock  options  is  recorded  in  the  consolidated  statement  of
operations,  with a corresponding  increase to additional paid in capital in the
statement of stockholders'  equity. Prior to 2006, as permitted by SFAS 123, the
Company accounted for share-based payments to employees using APB 25's intrinsic
value method and recognized no  compensation  cost for employee stock options in
prior years.  Had the Company adopted SFAS 123R in the prior period,  the impact
of  that  standard  would  have  approximated  the  impact  of  SFAS  123 in the
disclosure of pro-forma  net income  (loss) and earnings per share  described as
follows:
<TABLE>
<CAPTION>
<S>                                                                                              <C>               <C>
(in thousands, except per share data)                                                            2005             2004
Net income (loss):                                                                              ========        ========
As reported.......................................................................           $    5,128      $   (3,351)
Deduct: pro forma stock based compensation expense for
    stock options pursuant to Statement 123.......................................                 (126)            (79)
                                                                                             ----------       ---------
Pro forma.........................................................................           $    5,002      $   (3,430)
                                                                                             ==========       =========
Net income (loss) per common share:
Basic - as reported...............................................................           $     0.11      $   (0.07)
Basic - pro forma.................................................................                 0.11          (0.07)
Assuming dilution - as reported...................................................                 0.11          (0.07)
Assuming dilution - pro forma ....................................................                 0.11          (0.07)
                                                                                             ==========        ========
</TABLE>
     Deferred rent receivable and revenue recognition:

     The Company  previously  earned rental income under  operating  leases with
tenants.  Minimum lease rentals are recognized on a straight-line basis over the
term of the leases.  The cumulative  difference between lease revenue recognized
under this method and the  contractual  lease payment terms, if any, is recorded
as  deferred  rent  receivable  and  would be  included  in other  assets on the
Consolidated  Balance Sheets.  Revenue from tenant  reimbursement of common area
maintenance,  utilities and other operating expenses are recognized  pursuant to
the tenant's lease when earned and due from tenants.

     Property operating and maintenance:

     Included in property operating and maintenance are expenses for common area
maintenance,  utilities,  real  estate  taxes and other  reimbursable  operating
expenses,  which have not been reduced by amounts reimbursed by tenants pursuant
to lease agreements.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     Depreciation:

     Depreciation  expense for buildings is calculated on a straight-line  basis
over 39 years. Tenant improvements are typically  depreciated over the lesser of
the remaining life of the tenants lease or the estimated useful lives.

     New Accounting Pronouncements:

     In July 2006, the Financial  Accounting  Standards Board ("FASB")  released
FASB  Interpretation  No. 48,  "Accounting  for Uncertainty in Income Taxes - an
Interpretation of FASB Statement 109" ("FIN 48"), which clarifies the accounting
for uncertainty in income taxes recognized in companies' financial statements in
accordance  with FASB  Statement  109,  "Accounting  for Income  Taxes."  FIN 48
prescribes a recognition  threshold and measurement  attribute for the financial
statement  recognition and measurement of a tax position taken or expected to be
taken in a tax return.  The  evaluation of a tax position will be sustained upon
examination.  The second step is  measurement  whereby a tax position that meets
the  more-likely-than-not  recognition  threshold is measured to  determine  the
amount of benefit to recognize in the financial statements. FIN 48 also provides
guidance on derecognition threshold of recognized tax benefits,  classification,
interest  and  penalties,   accounting  in  interim   periods,   disclosure  and
transition.  FIN 48 is effective for fiscal years  beginning  after December 15,
2006. The Company will adopt the new  requirements  in the first quarter of 2007
and is currently  evaluating the impact that the adoption of FIN 48 will have on
its consolidated financial statements.

     In  September  2006,  the FASB issued  Statement  of  Financial  Accounting
Standards No. 158, "Employer's  Accounting for Defined Benefit Pension and Other
Postretirement  Plans,  an  Amendment  of SFAS No. 87, 88, 106 and 132R"  ("SFAS
158").  SFAS 158  requires an  employer to (i)  recognize  in its  statement  of
financial position an asset for a plan's over funded status or a liability for a
plan's under funded  status;  (ii) measure a plan's  assets and its  obligations
that  determine  its funded status as of the end of the  employer's  fiscal year
(with limited exceptions); and (iii) recognize changes in the funded status of a
defined  benefit  postretirement  plan in the year in which the  changes  occur.
Those changes will be reported in comprehensive income of a business entity. The
requirement  to recognize the funded status of a benefit plan and the disclosure
requirements  are  effective  as of the  end of the  fiscal  year  ending  after
December 15, 2006, for entities with publicly traded equity  securities,  and at
the end of the fiscal year ending after June 15, 2007,  for all other  entities.
The requirement to measure plan assets and benefit obligations as of the date of
the employer's fiscal year-end  statement of financial position is effective for
fiscal years ending after December 15, 2008. We do not believe that the adoption
of SFAS 158 will have a material effect on the Company's  consolidated financial
statements as the Company intends to terminate its Supplemental  Retirement Plan
(the "Supplemental Plan") on or about May 31, 2007, as further discussed in Note
7 herein.  The Company will continue to recognize an expense through to the date
on which the Supplemental Plan will terminate. The ultimate liability related to
the  final  termination  of  the  Supplemental  Plan  is  not  reflected  as all
conditions for the final  termination of the Supplemental Plan have not yet been
met.

     In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement No. 157, Fair Value  Measurements  ("SFAS 157"). SFAS 157 defines fair
value,  establishes  a framework for  measuring  fair value in  accordance  with
accounting  principals  generally  accepted  in the  United  States  of  America
("GAAP") and expands disclosure  requirements regarding fair value measurements.
SFAS 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years.  Earlier
application is encouraged, provided that the reporting entity has not yet issued
financial statements for such fiscal year, including financial statements for an
interim  period within such fiscal year. The Company is evaluating the impact of
the adoption of SFAS 157 on its financial statements.

     In February 2007, the FASB issued  Statement No. 159, The Fair Value Option
for Financial  Assets and Financial  Liabilities  Including an amendment of FASB
Statement No. 115 ("SFAS 159").  SFAS 159 permits  entities to choose to measure
many  financial  instruments  and  certain  other  items  at fair  value  and is
effective as of the beginning of an entity's first fiscal year that begins after
November 15, 2007.  Early  adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the  provisions  of SFAS  157.  No  entity  is  permitted  to apply the
Statement  retrospectively  to fiscal years  preceding the effective date unless
the entity chooses early  adoption.  The Company is evaluating the impact of the
adoption of SFAS 159 on its financial statements.



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     Note 3 - Investment Securities

     Investment securities - held to maturity consist of U.S. Treasury Bills and
a U.S.  Treasury  Note  with  original  maturities  of one  year or less and are
carried at amortized  cost based upon the  Company's  intent and ability to hold
these investments to maturity.

     Investment  securities  - available  for sale,  consist of  investments  in
equity  securities  held for an indefinite  period and are carried at fair value
with net unrealized gains and losses recorded  directly in a separate  component
of stockholders' equity.

     Investment securities at December 31 consist of the following:
<TABLE>
<CAPTION>
<S>                              <C>             <C>              <C>            <C>              <C>              <C>
                                               2006                                              2005
                             ========================================         ==========================================
                                                Cost or                                          Cost or
                              Carrying        Amortized           Fair        Carrying         Amortized           Fair
(in thousands)                   Value             Cost          Value           Value              Cost          Value
                                ======         ========          =====          ======          ========          =====
Held to Maturity:
    U.S. Treasury Bills......$  18,187         $ 18,187       $ 18,196       $  39,031         $  39,031      $  39,034
    U.S. Treasury Note.......   16,436           16,436         16,429               -                 -              -
                              --------         --------       --------       ---------         ---------      ---------
                                34,623           34,623         34,625          39,031            39,031         39,034
Available for Sale:
     Equity Securities.......    1,417            1,279          1,417           1,729             1,798          1,729
                              --------         --------       --------       ---------         ---------      ---------
                             $  36,040         $ 35,902       $ 36,042       $ 40,760          $  40,829      $  40,763
                              ========         ========       ========       =========         =========      =========
</TABLE>
     The gross  unrealized  gains (losses) on investment  securities at December
31, consist of the following:
<TABLE>
<CAPTION>
<S>                                                                                           <C>                 <C>
(in thousands)                                                                                 2006                2005
                                                                                               ====                ====
Held to Maturity:
Gross unrealized gains..............................................................        $     9            $      3
                                                                                               ====                ====
Gross unrealized losses............................................................         $    (7)           $      -
                                                                                               ====                ====
Available for Sale:
Gross unrealized gains..............................................................        $   138            $      -
                                                                                               ====                ====
Gross unrealized losses.............................................................        $     -            $    (69)
                                                                                               ====                ====
</TABLE>
     The realized gain on the sales of investment  securities available for sale
for the years ended December 31, 2006, 2005 and 2004 are as follows:
<TABLE>
<CAPTION>
<S>                                                                                        <C>           <C>         <C>
(in thousands)                                                                             2006         2005        2004
                                                                                           ====         ====        ====
Net sale proceeds...................................................................    $    564     $   548     $ 17,790
Cost basis..........................................................................        (519)       (528)     (17,043)
                                                                                          -------      ------     --------
Realized gain.......................................................................    $     45     $    20     $    747
                                                                                          ========     ======     ========
</TABLE>
     During 2004, the Company purchased and sold a $7 million U.S. Treasury Note
and an $8 million U.S.  Treasury Note resulting in gains of $89,000 and $24,000,
respectively  which are included in realized  gains on investment  securities in
the 2004 Consolidated Statement of Operations.


<PAGE>
                      AMBASE CORPORATION AND SUBSIDIARIES
              Notes to Consolidated Financial Statements (continued)

     Note 4 - Earnings Per Share

     The  calculation  of basic and diluted  earnings per share,  including  the
effect of dilutive securities, for the years ended December 31, is as follows:
<TABLE>
<CAPTION>
<S>                                                                   <C>                <C>                     <C>
(in thousands, except per share data)                                 2006                2005                  2004
                                                                     =====              ======                ======
Loss from continuing operations...............................  $   (5,463)         $   (5,519)           $   (4,696)
                                                                     =====              ======                 =====
Weighted average common shares outstanding ...................      45,327              46,234                46,225
Effect of Dilutive Securities:
Assumed stock option exercise.................................           -                   -                     -
                                                                    ------              ------                ------
Weighted average common shares outstanding assuming dilution..      45,327              46,234                46,225
                                                                    ======              ======                ======
Loss from continuing operations per common share:
Basic.........................................................  $   (0.12)          $   (0.12)            $   (0.10)
Assuming dilution.............................................      (0.12)              (0.12)                (0.10)
                                                                    ======              ======                ======
</TABLE>
     Options to purchase  common  stock of 1,240,000  shares in 2006,  1,440,000
shares in 2005 and 1,245,000  shares in 2004 were excluded from the  computation
of diluted  earnings per share because these  options were  antidilutive  in the
computation of earnings per share from continuing operations.

     Note 5 - Stockholders' Equity

     Authorized  capital  stock  consists  of  50,000,000  shares of  cumulative
preferred stock,  $0.01 par value, and 200,000,000 shares of Common Stock, $0.01
par value.

     Changes in the  outstanding  shares of Common  Stock of the  Company are as
follows:
<TABLE>
<CAPTION>
<S>                                                                 <C>                 <C>                     <C>

                                                                   2006              2005                    2004
                                                                  =======           =======                =======
Balance at beginning of year.................................   46,233,519          46,233,519            46,158,519

Issuance of common shares....................................            -                   -                75,000

Common shares repurchased....................................   (1,265,000)                  -                     -
                                                               ------------     --------------         -------------
Balance at end of year.......................................   44,968,519          46,233,519            46,233,519
                                                               ============     ==============         =============
</TABLE>
     At December 31, 2006,  Common Stock  balances  exclude  1,441,488  treasury
shares carried at an average cost of $0.96 per share, aggregating  approximately
$1,384,000.

     At December 31, 2005, and December 31, 2004,  Common Stock balances exclude
176,488  treasury  shares  carried  at an  average  cost  of  $3.88  per  share,
aggregating approximately $685,000.

     The Company  issued  75,000  previously  authorized  common  shares  during
February  2004, in connection  with the exercise of an employee  stock option at
the exercise price of $0.21 per share.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     At December 31,  2006,  there were  5,110,000  common  shares  reserved for
issuance under the Company's stock option and other employee benefit plans.

     Stockholder Rights Plan:

     On January 29, 1986, the Company's  Board of Directors  declared a dividend
distribution  of one right  for each  outstanding  share of Common  Stock of the
Company.  The rights, as amended,  which entitle the holder to purchase from the
Company a common share at a price of $75.00,  are not exercisable until either a
person or group of  affiliated  persons  acquires  25% or more of the  Company's
outstanding common shares or upon the commencement or disclosure of an intention
to  commence  a tender  offer or  exchange  offer for 20% or more of the  common
shares.  The rights are redeemable by the Company at $0.05 per right at any time
until the earlier of the tenth day following an  accumulation  of 20% or more of
the Company's shares by a single acquirer or group, or the occurrence of certain
Triggering Events (as defined in the Stockholder  Rights Plan). In the event the
rights become exercisable and thereafter, the Company is acquired in a merger or
other business combination,  or in certain other circumstances,  each right will
entitle the holder to purchase from the surviving corporation,  for the exercise
price,  Common Stock  having a market  value of twice the exercise  price of the
right.  The rights are subject to adjustment  to prevent  dilution and expire on
February 10, 2011.

     Common Stock Repurchase Plan:

     In January 2002, the Company  announced a common stock repurchase plan (the
"Repurchase  Plan") which allows for the  repurchase by the Company for up to 10
million shares of its common stock in the open market.

     The Repurchase Plan is conditioned upon favorable  business  conditions and
acceptable prices for the common stock.  Purchases under the Repurchase Plan may
be made,  from  time to time,  in the  open  market,  through  block  trades  or
otherwise.  Depending on market  conditions and other factors,  purchases may be
commenced or suspended any time or from time to time without prior notice.

     During the year 2006, the Company  repurchased  1,265,000  shares of common
stock, at various market prices, pursuant to the Repurchase Plan.



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     Note 6 - Comprehensive Income (Loss)

     Comprehensive  income (loss), for the year ended December 31 is composed of
net income  (loss) and other  comprehensive  income  (loss)  which  includes the
change in unrealized gains (losses) on investment securities available for sale,
and recognition of additional minimum pension liability as follows:
<TABLE>
<CAPTION>
<S>                            <C>             <C>             <C>              <C>             <C>              <C>

(in thousands)                                    2006                                            2005
                               =========================================      ==========================================
                               Minimum       Unrealized      Accumulated      Minimum      Unrealized        Accumulated
                               Pension       Gains (Losses)  Other            Pension      Gains (Losses)       Other
                               Liability     on Investment   Comprehensive    Liability    on Investment     Comprehensive
                               Adjustment    Securities      Income           Adjustment   Securities           Income
                               ========      ========       ===========       =========     =========         ==========
Balance beginning of period...  $(1,326)     $    (69)     $   (1,395)     $   (412)        $    37           $     (375)
Reclassification adjustment for
  gains realized in net
  income (loss)...............        -            32              32             -              (5)                  (5)
Change during the period......      852           175           1,027          (914)           (101)              (1,015)
                                --------       ------       ---------       --------        --------          ----------
Balance end of period.........  $  (474)     $    138      $     (336)     $ (1,326)        $   (69)          $    (1,395)
                                ========       ======      ==========       ========        ========          ==========
</TABLE>
<TABLE>
<CAPTION>
<S>                                         <C>               <C>              <C>
(in thousands)                                                2004
                                           ==========================================
                                         Minimum         Unrealized       Accumulated
                                         Pension         Gains on           Other
                                         Liability      Investment       Comprehensive
                                         Adjustment     Securities          Income
                                         =========      =========         ==========
Balance beginning of period....         $       -       $      84     $         84
Reclassification adjustment for
  gains realized in net loss......              -            (432)            (432)
Change during the period...........     $    (412)            385              (27)
                                        ---------------  ----------    ------------
Balance end of period................   $    (412)      $      37     $       (375)
                                        ===============  ==========    ============
</TABLE>
<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     Note 7 - Pension and Savings Plans

     The Company  sponsors a non  tax-qualified  supplemental  retirement  plan,
initially  adopted by the  Company in 1985,  and as amended  and  restated  (the
"Supplemental  Plan"),  under  which only one current  executive  officer of the
Company is currently the sole participant.  The cost of the Supplemental Plan is
accrued but not funded. Mr. Bianco (the Company's Chairman,  President and Chief
Executive  Officer,  and the former  President  and Chief  Executive  Officer of
Carteret  Savings  Bank,  FA), is the only  current  employee of the Company who
participates in the Supplemental Plan and his Supplemental Plan benefit is fully
vested.

     The liability for the  Supplemental  Plan, which is accrued but not funded,
increased to $16,282,000 at December 31, 2006, from  $14,595,000 at December 31,
2005. The  Supplemental  Plan  liability  reflects the December 31, 2006 present
value of the  anticipated  May 31, 2007 lump-sum  payment amount of $16,676,115,
utilizing a 5.75% discount rate factor.  The Supplemental  Plan liability can be
further affected by changes in discount rates,  mortality,  and experience which
could be different from those assumed.

     The  Personnel  Committee  of the Board of  Directors  of the Company  (the
"Personnel  Committee") reviewed the Supplemental Plan and the Company's related
liability,  including the  desirability of continuing to maintain and administer
the  Supplemental  Plan, the untying of Mr. Bianco's future  employment with the
Company  from the  timing  of his  Supplemental  Plan  benefit  payment(s),  the
Company's overall financial position, and the desirability of continued accruals
under the  Supplemental  Plan after Mr.  Bianco's  current  employment  contract
expires on May 31, 2007. In connection with this review, the Personnel Committee
considered various options, including whether or not to terminate and/or curtail
the  Supplemental  Plan. For purposes of computing his accrued benefit under the
Supplemental  Plan, Mr. Bianco had 15.67 and 14.67 years of credited  service as
of December 31, 2006 and 2005, respectively.  Assuming continued employment with
the Company, he will have 16.08 years of credited service upon the expiration of
his current  employment  contract with the Company on May 31, 2007.  His accrual
percentage  under the  Supplemental  Plan is 4%, in effect  from the time of his
initial  employment with the Company,  and in accordance  with the  Supplemental
Plan (prior to the amendment described below), he had the entitlement to receive
his  Supplemental  Plan  benefit  in  either  a  lump-sum  or  an  annuity  upon
termination of his employment with the Company.

     During March 2006, the Company entered into a new employment agreement with
Mr. Bianco to extend his employment  with the Company for an additional five (5)
years beyond May 31, 2007, until May 31, 2012 (the "2007 Employment Agreement").
As part of the 2007  Employment  Agreement terms (i) Mr. Bianco's annual rate of
base salary will not increase  from his current  rate of base salary  during the
first three years of the 2007  Employment  Agreement (the amount of Mr. Bianco's
base salary for the fourth and fifth years of the 2007 Employment Agreement term
to be determined by the Personnel Committee, in its sole discretion, although in
no event less than $625,000 per annum); (ii) Mr. Bianco's service accruals under
the  Supplemental  Plan will cease as of May 31, 2007;  (iii) Mr. Bianco's Final
Average  Earnings (as defined in the Supplemental  Plan) for  Supplemental  Plan
benefit calculation  purposes,  are capped as of December 31, 2004; and (iv) Mr.
Bianco's annual bonus  opportunity  will no longer be linked to recovery efforts
in connection with the Company's Supervisory Goodwill litigation. Instead, on or
about  May  31,  2007,  Mr.  Bianco  will  receive  a  lump-sum  payment  of his
Supplemental  Plan benefit of  $16,676,115,  which amount was  calculated on the
basis of a 5.75% discount rate, a "RP-2000"  projected to 2004 mortality  table,
and 16.08 years of credited service,  and the Company and Mr. Bianco have agreed
to a long term incentive bonus formula,  at varying  percentages ranging from 5%
to  10%,  or  more,  based  upon  recoveries  received  by the  Company  for its
investment in Carteret Savings Bank, through litigation or otherwise  (including
the  Company's  Supervisory  Goodwill  litigation).   The  anticipated  lump-sum
Supplemental Plan benefit payment to Mr. Bianco is expected to be paid to him on
or about May 31, 2007 from the Company's available financial resources.

     The  Supplemental  Plan has  been  amended  to  provide  for its  automatic
termination  immediately following the payment to Mr. Bianco of his Supplemental
Plan  lump-sum  benefit  on or  about  May 31,  2007.  In  accordance  with  the
accounting for the Supplemental Plan's scheduled termination on or about May 31,
2007,  in  accordance  with  GAAP,  the  ultimate   liability  relating  to  the
anticipated  termination  of  the  Supplemental  Plan  is not  reflected  in the
financial   statements  presented  herein,  as  all  conditions  for  the  final
termination  of the  Supplemental  Plan have not yet been met.  The Company will
continue to recognize an expense for the Supplemental  Plan and the Supplemental
Plan liability will increase through the date on which the Supplemental  Plan is
terminated.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     Based  on  the  2007   Employment   Agreement  and  the  amendment  of  the
Supplemental  Plan, each as described above, the Company revised the calculation
of the Supplemental  Plan liability to reflect a 5.75% discount rate as of April
1, 2006, as set forth in the agreements,  as compared to the 5.50% discount rate
utilized as of December 31, 2005.  During 2006, the Supplemental  Plan liability
was increased by an expense of $1,687,000  comprised of an expense of $1,224,000
recorded to increase the  Supplemental  Plan  liability to the December 31, 2006
present  value of the  anticipated  May 31,  2007  lump-sum  payment  amount  of
$16,676,115, utilizing the 5.75% discount rate factor and an expense of $463,000
to reflect actuarially determined pension costs.

     An  additional  Supplemental  Plan expense of $852,000 was recorded for the
year ended December 31, 2006, to amortize the Supplemental  Plan minimum pension
liability  adjustment.  The  minimum  pension  liability  adjustment,  which  is
included  as a  component  of  stockholders'  equity  within  accumulated  other
comprehensive  loss in the  Company's  consolidated  financial  statements,  was
$1,326,000  as of December 31, 2005,  and is being  amortized on a straight line
basis  over the  14-month  from  April  1,  2006  through  May 31,  2007,  as an
additional  Supplemental  Plan expense of $284,000 per quarter.  The  additional
minimum  pension  liability  amortization  is  included  as a  component  of the
aggregate Supplemental Plan expense of $2,539,000 for the full year period ended
December 31, 2006.

     Pension expense for the  Supplemental  Plan for the years ended December 31
was as follows:
<TABLE>
<CAPTION>
<S>                                                                         <C>                  <C>               <C>

(in thousands)                                                              2006                2005               2004
                                                                            ====                ====               ====
Service cost of current period................................       $       463        $      1,031        $       948
Interest cost on projected benefit obligation.................             1,224                 769                710
Amortization of unrecognized losses...........................                 -                 287                232
Amortization of minimum pension liability.....................               852                   -                  -
                                                                     -----------        ------------        -----------
                                                                     $     2,539        $      2,087        $     1,890
                                                                     ===========        ============        ===========
</TABLE>
     A reconciliation  of the changes in the projected  benefit  obligation from
the  beginning  of the  year to the end of the  year  for  2006  and  2005 is as
follows:
<TABLE>
<CAPTION>
<S>                                                                                          <C>                    <C>
(in thousands)                                                                               2006                  2005
                                                                                             ====                  ====
Projected benefit obligation at beginning of year...................................    $  14,595             $  13,382
Service cost........................................................................          463                 1,031
Interest cost.......................................................................        1,224                   769
Actuarial (gain) loss, including effect of change in assumptions....................            -                  (587)
                                                                                        ---------             ---------
Projected benefit obligation at end of year.........................................    $  16,282             $  14,595
                                                                                        =========             =========
</TABLE>

<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     Accrued  pension costs for the  Supplemental  Plan at December 31, 2006 and
2005,  and  some  of the  assumptions  used  to  determine  these  amounts,  are
summarized below:
<TABLE>
<CAPTION>
<S>                                                                                                    <C>         <C>
(dollars in thousands)                                                                                 2006        2005
                                                                                                       ====        ====
Actuarial present value of benefit obligations:
Accumulated benefit obligations, fully vested................................................      $  16,282  $  14,595
                                                                                                   =========  =========
Projected benefit obligation for service rendered to date....................................      $  16,282  $  14,595
Unrecognized net loss........................................................................           (474)    (1,326)
Accumulated other comprehensive loss.........................................................            474      1,326
                                                                                                   ---------  ---------
Accrued pension costs........................................................................      $  16,282  $  14,595
                                                                                                   =========  =========
Major assumptions:
Discount rate................................................................................           5.75%      5.50%
Rate of increase in future compensation......................................................              -         -
                                                                                                   =========  =========
</TABLE>
     As of December 31, 2005, the Company's  accrued pension liability under the
Supplemental  Plan was increased by an additional  minimum  liability to reflect
the amount of the unfunded accumulated benefit obligation under the Supplemental
Plan at December 31, 2005. The 2005 additional minimum liability of $914,000 was
recorded as a charge to other comprehensive loss in 2005.

     The Company  sponsors the AmBase 401(k) Savings Plan (the "Savings  Plan"),
which is a "Section 401(k) Plan" within the meaning of the Internal Revenue Code
of 1986, as amended (the "Code"). The Savings Plan permits eligible employees to
make  contributions  of up to 15% of  compensation,  which  are  matched  by the
Company at a percentage  determined  annually.  The employer  match is currently
100% of the amount the employee elects to defer.  Employee  contributions to the
Savings Plan are invested at the employee's  discretion,  in various  investment
funds. The Company's  matching  contributions are invested in the same manner as
the compensation reduction  contributions.  The Company's matching contributions
to the Savings Plan,  charged to expense,  were $55,000,  $50,000 and $45,000 in
2006,  2005 and 2004,  respectively.  All  contributions  are subject to maximum
limitations contained in the Code.

     Note 8- Incentive Plans

     Under the Company's 1994 Senior Management Incentive Compensation Plan (the
"1994  Plan"),  any  executive  officer of the  Company  whose  compensation  is
required to be reported to  stockholders  under the  Securities  Exchange Act of
1934 (the  "Participants")  and who is  serving  as such at any time  during the
fiscal  year as to which an award is  granted,  may  receive  an award of a cash
bonus  ("Bonus"),  in an amount  determined  by the  Personnel  Committee of the
Company's Board of Directors (the  "Committee") and payable from an annual bonus
fund (the "Annual Bonus  Pool").  The Committee may award Bonuses under the 1994
Plan to  Participants  not later than 120 days after the end of each fiscal year
(the "Reference Year").

     If the  Committee  grants a Bonus  under the 1994  Plan,  the amount of the
Annual Bonus Pool will be an amount equal to the sum of (i) plus (ii), where:

     (i) is ten  percent  (10%) of the  amount  by  which  the  Company's  Total
Stockholders'  Equity, as defined, on the last day of a Reference Year increased
over the Company's Total  Stockholders'  Equity, as defined,  on the last day of
the immediately preceding Reference Year; and

     (ii) is five  percent  (5%) of the  amount  by which the  Company's  market
value,  as defined,  on the last day of the Reference  Year  increased  over the
Company's  market value on the last day of the immediately  preceding  Reference
Year.



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     Notwithstanding the foregoing,  the 1994 Plan provides that in the event of
a decrease in either or both of items (i) and/or (ii)  above,  the Annual  Bonus
Pool is determined by reference to the last Reference Year in which there was an
increase in such item.  If the  Committee  determines  within the  120-day  time
period to award a Bonus,  the share of the Annual  Bonus Pool to be allocated to
each  Participant  shall be as  follows:  45% of the Annual  Bonus Pool shall be
allocated to the Company's Chief Executive Officer,  and 55% of the Annual Bonus
Pool  shall be  allocated  pro  rata to each of the  Company's  Participants  as
determined  by the  Committee.  The Committee in its  discretion  may reduce the
percentage of the Annual Bonus Pool to any  Participant  for any Reference Year,
and such reduction  shall not increase the share of any other  Participant.  The
1994 Plan is not the  exclusive  plan under  which the  Executive  Officers  may
receive cash or other incentive  compensation  or bonuses.  No Bonuses were paid
attributable to the 1994 Plan for 2006, 2005, or 2004.

     Under the  Company's  1993  Stock  Incentive  Plan (the "1993  Plan"),  the
Company may grant to officers and employees of the Company and its subsidiaries,
stock options ("Options"),  stock appreciation rights ("SARs"), restricted stock
awards ("Restricted Stock"), merit awards ("Merit Awards") and performance share
awards ("Performance  Shares"),  through May 28, 2008. An aggregate of 5,000,000
shares of the  Company's  Common Stock are reserved for issuance  under the 1993
Plan (upon the exercise of Options and Stock Appreciation Rights, upon awards of
Restricted  Stock  and  Performance  Shares);  however,  of  such  shares,  only
2,500,000 shares in the aggregate shall be available for issuance for Restricted
Stock  Awards and Merit  Awards.  Such shares shall be  authorized  but unissued
shares of Common  Stock.  Options  may be granted  as  incentive  stock  options
("ISOs")  intended to qualify for favorable tax treatment  under Federal tax law
or as nonqualified stock options ("NQSOs").  SARs may be granted with respect to
any  Options  granted  under  the 1993 Plan and may be  exercised  only when the
underlying Option is exercisable. The 1993 Plan requires that the exercise price
of all Options and SARs be equal to or greater than the fair market value of the
Company's Common Stock on the date of grant of that Option.  The term of any ISO
or related SAR cannot  exceed ten years from the date of grant,  and the term of
any NQSO cannot  exceed ten years and one month from the date of grant.  Subject
to the terms of the 1993 Plan and any  additional  restrictions  imposed  at the
time of grant,  Options and any related SARs ordinarily will become  exercisable
commencing  one year  after  the date of  grant.  In the  case of a  "Change  of
Control" of the Company (as defined in the 1993 Plan),  Options granted pursuant
to the 1993 Plan may become fully exercisable as to all optioned shares from and
after the date of such Change in Control in the  discretion  of the Committee or
as  may  otherwise  be  provided  in  the  grantee's  Option  agreement.  Death,
retirement, or absence for disability will not result in the cancellation of any
Options.

     As a condition  to any award of  Restricted  Stock or Merit Award under the
1993 Plan, the Committee may require a participant to pay an amount equal to, or
in excess of, the par value of the shares of  Restricted  Stock or Common  Stock
awarded to him or her. Restricted Stock may not be sold, assigned,  transferred,
pledged or otherwise encumbered during a "Restricted Period",  which in the case
of grants to  employees  shall not be less than one year from the date of grant.
The Restricted Period with respect to any outstanding shares of Restricted Stock
awarded to  employees  may be reduced by the  Committee  at any time,  but in no
event  shall  the  Restricted  Period be less  than one  year.  Except  for such
restrictions,  the  employee  as the owner of such  stock  shall have all of the
rights of a  stockholder  including,  but not limited to, the right to vote such
stock and to receive  dividends  thereon as and when paid.  In the event that an
employee's  employment is terminated  for any reason,  an employee's  Restricted
Stock will be forfeited;  provided,  however,  that the Committee may limit such
forfeiture in its sole  discretion.  At the end of the  Restricted  Period,  all
shares  of  Restricted  Stock  shall  be  transferred  free  and  clear  of  all
restrictions to the employee.  In the case of a Change in Control of the Company
(as defined in the 1993 Plan),  an  employee  may receive his or her  Restricted
Stock free and clear of all restrictions in the discretion of the Committee,  or
as may otherwise be provided pursuant to the employee's Restricted Stock award.

     Performance  Share  awards of  Common  Stock  under the 1993 Plan  shall be
earned on the basis of the  Company's  performance  in relation  to  established
performance  measures  for a specific  performance  period.  Such  measures  may
include, but shall not be limited to, return on investment,  earnings per share,
return on stockholder's  equity, or return to stockholders.  Performance  Shares
may not be sold, assigned,  transferred,  pledged or otherwise encumbered during
the relevant performance period.  Performance Shares may be paid in cash, shares
of Common Stock or shares of Restricted  Stock in such portions as the Committee
may determine. An employee must be employed at the end of the performance period
to receive payments of Performance Shares; provided,  however, in the event that
an  employee's  employment  is  terminated  by  reason  of  death,   disability,
retirement or other reason  approved by the  Committee,  the Committee may limit
such  forfeiture in its sole  discretion.  In the case of a Change in Control of
the Company (as  defined in the 1993 Plan),  an employee  may receive his or her
Performance  Shares in the discretion of the  Committee,  or as may otherwise be
provided in the employee's Performance Share award.



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     The Company's  1985 Stock Option Plan (the "1985  Plan"),  provided for the
granting of up to  2,000,000  shares of stock  options for the purchase of up to
2,000,000 shares of Common Stock to salaried employees, through May 22, 1995. No
additional  stock options are outstanding or can be awarded under the 1985 Plan.
Under the 1985 Plan,  there were 75,000  shares  under  option  outstanding  and
exercisable  as of December  31, 2003 at a weighted  average  exercise  price of
$0.21 per share. In February 2004, the outstanding stock option,  under the 1985
Plan, for 75,000 common shares was exercised.

     Incentive plan activity is summarized as follows:
<TABLE>
<CAPTION>
<S>                                                            <C>                              <C>
                                                                               1993 Stock
(shares in thousands)                                                          Incentive Plan
                                                                   ===============================
                                                                                                 Weighted
                                                               Shares                            Average
                                                                Under                           Exercise
                                                               Option                             Price
                                                              ---------                        -----------
Outstanding at December 31, 2003.....................             1,050                        $   1.15
 Expired.............................................               (45)                           4.02
 Granted.............................................               240                            0.66
                                                              --------
Outstanding at December 31, 2004.....................             1,245                        $   1.00
Expired..............................................               (45)                           4.02
Granted..............................................               240                            0.81
                                                               -------
Outstanding at December 31, 2005.....................             1,440                            0.96
Expired..............................................              (200)                           0.66
                                                               -------
Outstanding at December 31, 2006.....................             1,240                            1.01
                                                               =======
Options exercisable at:
December 31, 2006....................................             1,036                        $   1.02
December 31, 2005....................................               912                            1.00
December 31, 2004....................................               614                            1.14
</TABLE>
     The  following  table  summarizes  information  about the  Company's  stock
options outstanding and exercisable under the 1993 Plan at December 31, 2006, as
follows:
<TABLE>
<CAPTION>
<S>    <C>              <C>            <C>                   <C>                     <C>                       <C>
(shares in thousands)                      Options Outstanding                                     Options Exercisable
                                       ============================                               =====================
                                          Weighted
                                           Average
                                         Remaining           Weighted                                          Weighted
       Range of                        Contractual            Average                                           Average
       Exercise                               Life           Exercise                                          Exercise
         Prices         Shares          (in years)              Price                  Shares                     Price
         ======          =====            ========            =======                   =====                   =======
 $0.60 to $0.90            500                   7              $0.73                     380                     $0.64
       $0.95                15                   3               0.95                      15                      0.95
$1.09 to $1.19             700                   2               1.14                     616                      1.13
 $2.56 to $3.65             25                   2               3.00                      25                      3.00
                         -----                                                          -----
          Total          1,240                                                          1,036                      1.02
                         =====                                                          =====
</TABLE>
<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     At December 31, 2006, the weighted  average  remaining  contractual life in
years for options  outstanding and options  exercisable was 4.40 and 4.34 years,
respectively.  At  December  31,  2006,  the  exercise  price of  stock  options
outstanding  and  exercisable was greater than the market price of the Company's
stock; therefore, no intrinsic value for stock options is reflected herein.

     During the year ended December 31, 2006, the Company recorded  compensation
expense of $88,000  relating to unvested  stock  options.  Compensation  expense
relating  to  stock  options  is  recorded  in  the  consolidated  statement  of
operations,  with a corresponding  increase to additional paid in capital in the
statement of stockholders'  equity. Prior to 2006, as permitted by SFAS 123, the
Company accounted for share-based payments to employees using APB 25's intrinsic
value method and recognized no  compensation  cost for employee stock options in
prior years. See Note 2 for additional information,  including disclosure of the
pro-forma net income (loss) and earnings per share had the Company  adopted SFAS
123R in prior periods.

     The fair  value of each  option  award was  estimated  on the date of grant
using the  Black-Scholes-Merton  option valuation model  ("Black-Scholes")  that
uses the assumptions  noted in the following  table.  Expected  volatilities are
based  on  historical  volatility  of the  Company's  stock.  The  Company  uses
historical data to estimate option  exercises and employee  terminations  within
the valuation  model. The expected term of options granted is estimated based on
the  contractual  lives of option  grants,  option vesting period and historical
data and represents  the period of time that options  granted are expected to be
outstanding. The risk-free interest rate for periods within the contractual life
of the option is based on the U.S.  Treasury bond yield in effect at the time of
grant.  No  adjustments  were  made  in 2006 to the  input  assumptions  for the
calculation  of the fair value of stock options  granted in 2005 and prior years
from the pro forma amounts  previously  presented in the Company's  prior period
financial statements.

     The  Black-Scholes  option  valuation  model  requires  the input of highly
subjective assumptions, including the expected life of the stock-based award and
stock price volatility. The assumptions noted herein represent management's best
estimates,   but  these  estimates   involve  inherent   uncertainties  and  the
application of management  judgment.  As a result, if other assumptions had been
used,  our recorded and pro forma  stock-based  compensation  expense could have
been  materially  different  from that  depicted  herein.  In  addition,  we are
required to estimate the expected forfeiture rate and only recognize expense for
those  shares  expected to vest.  If our actual  forfeiture  rate is  materially
different  from our  estimate,  the  share-based  compensation  expense could be
materially different.

     The Company believes that the use of the Black-Scholes model meets the fair
value  measurement   objectives  of  SFAS  123R  and  reflects  all  substantive
characteristics  of the instruments  being valued. No stock options were granted
during the year ending  December  31,  2006.  The per share grant date  weighted
average estimated values of employee stock option grants under the 1993 Plan, as
well as the  assumptions  used to calculate such values granted during the years
ended December 31, 2005 and 2004 are as follows:
<TABLE>
<CAPTION>
<S>                                                                <C>                     <C>
                                                                    2005                   2004
                                                                   =====                   ====
Weighted average fair
     value at grant date................................           $0.39                  $0.32
Estimated dividend yield................................               0%                     0%
Risk free interest rate.................................            4.24%                  4.30%
Estimated volatility....................................            0.44                   0.46
Expected life in years..................................               6                      6
                                                                    ====                  =====
</TABLE>
<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     The  following  table  presents  information  regarding  non-vested  option
activity during the full year period ended December 31, 2006:
<TABLE>
<CAPTION>
<S>                                                                             <C>                     <C>
                                                                                   Weighted
                                                                                   Average
                                                                                   Number of             Grant-Date
                                                                                   Shares                Fair Value
                                                                                --------------          -------------
         Non-vested at January 1, 2006.......                                         528,000                $0.44
         Vested during period................                                        (324,000)                0.41
                                                                                    ---------                 ====
         Non-vested at December 31, 2006.....                                         204,000                $0.47
                                                                                    =========                 ====
</TABLE>
     The total fair value of shares  vested  during the full year periods  ended
December 31, 2006 and December 31, 2005, was $134,000 and $88,000, respectively.
As of December 31, 2006, there was no remaining  unamortized  compensation  cost
related to non-vested  share-based  compensation  arrangements  related to stock
options granted under the 1993 Plan.

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating the fair value of traded options,  which have no vesting restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate,  and
given the  substantial  changes in the price per share of the  Company's  Common
Stock, in management's opinion, the existing models do not necessarily provide a
reliable  single measure of the fair value of its employee stock options.  For a
summary of the pro forma amounts  calculated  in  accordance  with SFAS 123, see
Note 2.

     Note 9 - Income Taxes

     The  components  of income tax expense for  continuing  operations  for the
years ended December 31 are as follows:
<TABLE>
<CAPTION>
<S>                                                                    <C>                  <C>                <C>
(in thousands)                                                              2006                2005               2004
                                                                            ====                ====               ====
Income tax expense - current state and local..................         $    (132)           $     (95)         $    (120)
                                                                       ----------           ----------         ----------
Total                                                                  $    (132)           $     (95)         $    (120)
                                                                       ==========           ==========         ==========
</TABLE>
     The  components of pretax income (loss) and the  difference  between income
taxes from continuing operations,  computed at the statutory federal rate of 35%
in 2006,  2005 and 2004,  and the  provision  for income  taxes from  continuing
operations for the years ended December 31 follows:
<TABLE>
<CAPTION>
<S>                                                                    <C>                 <C>               <C>
(in thousands)                                                              2006                2005               2004
                                                                            ====                ====               ====
Loss from continuing operations before income taxes.............       $  (5,331)           $ (5,424)         $  (4,576)
                                                                       =========            ========          =========
Tax (expense) benefit:
Tax at statutory federal rate...................................       $   1,866            $  1,898          $   1,602
Accounting loss benefit not recognized..........................          (1,866)             (1,898)            (1,602)
State income taxes..............................................            (132)                (95)              (120)
                                                                       ---------            --------          ---------
Income tax expense..............................................       $    (132)           $    (95)         $    (120)
                                                                       =========            ========          =========
</TABLE>
<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     State income tax amounts for 2006 and 2004  primarily  consist of a minimum
tax on capital to the state of  Connecticut.  In 2005, the Company  utilized net
operating loss ("NOL")  carryforwards  and  alternative  minimum tax ("AMT") NOL
carryforwards as available to offset taxable income generated from the 2005 sale
of Two Soundview as discussed in Note 13 herein.  However, due to limitations on
the amount of NOL  carryforwards  that could be utilized against taxable income,
an income tax provision of $400,000 for discontinued operations, attributable to
a provision for federal  alternative  minimum tax of $150,000 and a provision of
$250,000 for  Connecticut  state taxes was recorded in the fourth  quarter ended
December 31, 2005.

     In  December  2006,  the  Company   recorded  other  income  of  $1,201,000
attributable to an Internal Revenue Service ("IRS")  interest refund,  consented
to by the IRS in December 2006, and received by the Company in January 2007. The
refund resulted from the Company's pursuit of interest refund claims for several
prior tax years under a tax code  provision  which  allowed for the  retroactive
recovery of the interest  differential  where a taxpayer had a tax  underpayment
(subject to higher  interest  payment rates) for one tax year and a simultaneous
tax  overpayment  (subject to lower interest refund rates) for another tax year.
The Company is continuing to pursue similar claims from several other tax years,
but at the  current  time the  Company  can give no  assurances  as to the final
amounts  of any  additional  interest  refunds,  if any,  or when they  might be
received.

     As a  result  of the  Office  of  Thrift  Supervision's  December  4,  1992
placement of Carteret in  receivership,  under the  management of the Resolution
Trust Corporation  ("RTC")/Federal  Deposit Insurance Corporation ("FDIC"),  and
then proposed Treasury Reg. ss.1.597-4(g),  the Company had previously filed its
1992 and subsequent federal income tax returns with Carteret  disaffiliated from
the Company's  consolidated  federal income tax return. Based upon the impact of
Treasury  Reg.  ss.1.597-4(g),  which was issued in final form on  December  20,
1995, a continuing review of the Company's tax basis in Carteret, and the impact
of prior year tax return  adjustments  on the Company's  1992 federal income tax
return as filed,  the Company decided not to make an election  pursuant to final
Treasury  Reg.   ss.1.597-4(g)  to  disaffiliate  Carteret  from  the  Company's
consolidated  federal  income tax return  effective  as of December 4, 1992 (the
"Election Decision").

     The Company has made numerous  requests to the RTC/FDIC for tax information
pertaining to Carteret and the resulting successor institution, Carteret Federal
Savings Bank ("Carteret FSB"); however all of the information still has not been
received.  Based on the Company's  Election  Decision,  described above, and the
receipt of some of the requested information from the RTC/FDIC,  the Company has
amended its 1992  consolidated  federal income tax return to include the federal
income tax effects of Carteret and Carteret FSB (the "1992 Amended Return"). The
Company is still in the process of amending its consolidated  federal income tax
returns for 1993 and subsequent years.

     The Company anticipates that, as a result of filing a consolidated  federal
income tax return with  Carteret FSB, a total of  approximately  $170 million of
tax NOL  carryforwards  will be  generated  from  the  Company's  tax  basis  in
Carteret/Carteret  FSB as tax losses are  incurred by Carteret FSB of which $158
million are still available for future use. Based on the Company's filing of the
1992  Amended  Return ,  approximately  $56  million  of NOL  carryforwards  are
generated  for  tax  year  1992  which  expire  in  2007,   with  the  remaining
approximately  $102 million of NOL  carryforwards  to be generated,  expiring no
earlier than 2008. These NOL  carryforwards  would be available to offset future
taxable income,  in addition to the NOL carryforwards as further detailed below.
The Company can give no  assurances  with regard to the 1992  Amended  Return or
amended  returns for subsequent  years, or the final amount or expiration of NOL
carryforwards ultimately generated from the Company's tax basis in Carteret.

     In March 2000, the Company filed several carryback claims and amendments to
previously filed carryback claims with the IRS (the "Carryback  Claims") seeking
refunds from the IRS of  alternative  minimum tax and other federal income taxes
paid by the Company in prior years plus  applicable  IRS interest,  based on the
filing of the 1992 Amended Return.  In April 2003, IRS examiners issued a letter
to the Company  proposing to disallow the Carryback  Claims.  The Company sought
administrative review of the letter by protesting to the Appeals Division of the
IRS. In February  2005,  IRS Appeals  officials  completed  their  review of the
Carryback  Claims,  and disallowed  them.  The Company is currently  considering
whether to file suit for the tax refunds it seeks,  plus interest,  with respect
to the Carryback Claims. Even if the Company files suit, the Company can give no
assurances  as to the final  amount of  refunds,  if any,  or when they might be
received.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     Based upon the Company's  federal  income tax returns as filed from 1993 to
2005  (subject  to IRS  audit  adjustments),  excluding  the  NOL  carryforwards
utilized in 2005 and  excluding the NOL  carryforwards  expected to be generated
from the  Company's  tax basis in  Carteret/Carteret  FSB,  as noted  above,  at
December 31, 2006, the Company has NOL carryforwards  available to reduce future
federal taxable income, which expire if unused, as follows:
<TABLE>
<S>             <C>              <C>
                2009             $2,200,000
                2010              5,300,000
                2012              1,100,000
                2018              5,400,000
                2019              4,000,000
                2020              2,600,000
                2021              4,000,000
                2022              3,200,000
                2023              1,800,000
                2024                700,000
                                -----------
                                $30,300,000
                                ===========
</TABLE>
     The Company's  federal income tax returns for the years  subsequent to 1992
have not been reviewed by the IRS. The utilization of certain  carryforwards  is
subject to  limitations  under U.S.  federal  income tax laws. In addition,  the
Company  has  approximately  $21  million  of  AMT  credit  carryforwards  ("AMT
Credits"),  which are not  subject  to  expiration.  Based on the  filing of the
Carryback  Claims, as further discussed above, the Company would seek to realize
approximately $8 million of the $21 million of AMT Credits.

     The Company has  calculated a net deferred tax asset of $31 million and $32
million as of December 31, 2006 and 2005,  respectively,  arising primarily from
NOL's and  alternative  minimum tax credits (not including the  anticipated  tax
effects of the NOL's  expected to be generated  from the  Company's tax basis in
Carteret,  resulting from the Election Decision, as more fully described above).
A valuation  allowance  has been  established  for the entire net  deferred  tax
asset,  as  management,  at the  current  time,  has no basis to  conclude  that
realization is more likely than not.

     Note 10 - Legal Proceedings

     The Company is or has been a party in a number of lawsuits or  proceedings,
including the following:

     (a) Supervisory Goodwill Litigation.  During the third quarter of 1993, the
Company filed a claim against the United  States,  in the United States Court of
Federal  Claims (the "Court of Federal  Claims" or the "Court"),  based upon the
impact of the Financial  Institutions  Reform,  Recovery and  Enforcement Act of
1989   ("FIRREA")  on  the  Company's   investment  in  Carteret   Savings  Bank
("Carteret").  Approximately 120 other similar so-called  "supervisory goodwill"
cases, were commenced by other financial institutions and/or their shareholders,
many are still  pending in the Court of Federal  Claims.  Three of these  cases,
Winstar Corp. v. United States, Glendale Federal Bank, FSB v. United States, and
Statesman  Savings  Holding Corp. v. United States (the  "Consolidated  Cases"),
which  involve  many of the same  issues  raised  in the  Company's  suit,  were
appealed to the United States  Supreme Court (the "Supreme  Court").  On July 1,
1996, the Supreme Court issued a decision in the Consolidated Cases. The Supreme
Court's  decision  affirmed the lower Court's grant of summary judgment in favor
of the  plaintiffs  on the  issue of  liability  and  remanded  the  cases for a
determination  of damages.  Although the decision in the  Consolidated  Cases is
beneficial  to the  Company's  case,  it is not  necessarily  indicative  of the
ultimate outcome of the Company's action.

     On September 18, 1996,  the Court of Federal Claims entered an Omnibus Case
Management  Order that will govern further  proceedings in the Company's  action
and most of the other so-called  "Winstar-related" cases. On March 14, 1997, the
Court entered an order permitting the Federal Deposit Insurance Company ("FDIC")
to intervene as an  additional  plaintiff in  forty-three  cases,  including the
Company's  case,  but not  allowing  the  FDIC  to be  substituted  as the  sole
plaintiff in those cases.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

     On March 20,  1998,  the FDIC filed a motion for partial  summary  judgment
against the United States on certain liability  issues,  and the Company filed a
memorandum  in  support of that  motion.  Fact  discovery  for the  Company  was
completed  November  30,1999  pursuant to an  extension  of time  granted by the
Court.  On September  9, 1999,  the Company  filed a Motion For Partial  Summary
Judgment On Liability under a Fifth Amendment  Takings claim theory of recovery.
On November  24, 1999,  the FDIC,  as successor to the rights of Carteret and as
Plaintiff-Intervenor  in the case, filed a response brief opposing the Company's
Motion. On December 6, 1999, the Department of Justice (the "DOJ") (on behalf of
the United  States)  filed a brief  opposing  the  Company's  Motion For Partial
Summary  Judgment On  Liability  and  Cross-Moved  for  Summary  Judgment On the
Company's Takings claim. On January 25, 2000, the Company responded to the DOJ's
brief  and the  FDIC's  brief  by  filing a Brief  (i) In  Reply To  Defendant's
Opposition  To  Plaintiffs'  Motion  For  Partial  Summary  Judgment,   (ii)  In
Opposition To Defendant's  Cross-Motion For Summary Judgment, and (iii) In Reply
To FDIC's  Response To  Plaintiffs'  Motion For  Partial  Summary  Judgment.  On
February 22, 2000 the DOJ filed a brief in Reply To  Plaintiffs'  Opposition  To
Defendant's Cross-Motion For Summary Judgment.

     On October 2, 2000, Senior Judge Loren Smith of the Court of Federal Claims
("Judge Smith") heard oral arguments in the Company's  Supervisory Goodwill case
against the United States  government.  The Court heard arguments both as to the
contractual  liability of the United States to Carteret  Savings Bank, and as to
the Company's  claim  against the United States under the Takings  Clause of the
Fifth Amendment.

     On August 25, 2003,  the Court of Federal Claims issued a decision in which
it (i) ruled that the Government  had entered into and breached its  supervisory
goodwill contracts with the Company's wholly-owned  subsidiary,  Carteret;  (ii)
rejected the Company's  claim that it was entitled to recover  damages  directly
from the Government under the Takings Clause for the loss of Carteret; and (iii)
rejected the Company's  claim that the Government had "illegally  exacted" $62.5
million  that the Company  paid into  Carteret  subsequent  to the  Government's
breach of the Goodwill contracts.  Specifically, the Court held that the Company
could not recover  damages under the Takings Clause because it could be restored
to the  position  it was in  before  the  breach  through  Carteret's  breach of
contract action.

     On September  17, 2003,  the Company filed a motion to dismiss the FDIC and
to define the appropriate  measure of Carteret's  contract damages. On September
30, 2003, the FDIC, as  plaintiff-intervenor in the case, and the United States,
as  defendant  in the case,  each filed a  separate  response  to the  Company's
motion.  The Company  argued in its motion that because  Carteret would not have
been seized but for the Government's breach of contract, no receivership deficit
would have been incurred.  Accordingly,  the Company argued that Carteret should
be entitled to recover  contract  damages that include both: (i) the full amount
of the  receivership  deficit,  as an  offset to the  deficit  and (ii) the full
amount  of  the   positive   value  it  would  have  had  but  for  the  breach.
Alternatively,  the Company  argued that, if Carteret is not entitled to recover
both  these  amounts,  or if any  award  must be  offset  by the  amount  of the
receivership  deficit,  the Company  should be entitled to  demonstrate  why the
receivership deficit has been erroneously overstated. The DOJ responded with the
theories  that  Carteret  would have failed  even if  Supervisory  Goodwill  was
counted.  The FDIC,  who is both the  receiver  for the estate of Carteret  (and
hence its legal advocate in court) as well as a creditor of the estate, took the
position  that the Court of  Federal  Claims has no  jurisdiction  to review the
accuracy,  validity,  or amount of the Carteret receivership deficit reported by
the FDIC. That  receivership  deficit  consists of the FDIC's  subrogated  claim
against the thrift, interest,  taxes, and administrative expenses charged by the
FDIC to the  thrift.  Because  the  receivership  deficit  continues  to  accrue
interest,  it grows on a daily basis.  The FDIC has  represented to the Court of
Federal  Claims  that is  does  not  expect  to  present  any  expert  testimony
articulating a theory of damages for Carteret that would exceed the current size
of the  receivership.  While  the  failure  to seek  damages  in  excess  of the
receivership deficit has previously been held to be cause for dismissal for lack
of standing,  the FDIC has stated that it believes it still has standing in this
case based upon the damage theories it expects the Company to present.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIAIRES
             Notes to Consolidated Financial Statements (continued)

     On October 1, 2003, the Court held a telephonic status conference  pursuant
to an order set forth in the August 25,  2003  opinion.  Pursuant to that status
conference,  the Court  ordered that through  their  additional  briefing on the
Company's  Motion to Dismiss the FDIC and to define the  appropriate  measure of
Carteret's  contract  damages (i.e.,  through the Company's  reply brief and the
surreply  brief granted to the FDIC and the United  States),  the parties should
address the question  of,  "whether the Court has the power to review the amount
of the  receivership  deficit as  administered  by the FDIC." In an order  dated
October 16, 2003, the Court modified the briefing schedule such that the Company
filed its reply brief as required on October 31, 2003, and the surreply brief of
the FDIC and the United  States were filed as required in  November,  2003.  The
Court held oral  argument on this issue on November  20,  2003.  The DOJ and the
FDIC filed briefs  arguing that (1) the Court of Federal Claims had no authority
to scrutinize the validity of the receivership  deficit reported by the FDIC and
(2) the Court should dismiss AmBase's remaining damages claims because they were
allegedly  waived.  On August 31, 2004, the Court denied the Company's Motion to
Dismiss  the FDIC,  but granted  the  Company's  Motion to Define the Measure of
Carteret's Contract Damages to the extent it requested the Court to consider the
size and value of the FDIC's receivership  deficit when calculating damages. The
Court subsequently conducted a status conference on October 4, 2004, and ordered
the Company to submit a proposed  litigation  time-line  to the Court by October
22, 2004 which was timely submitted. The Court ordered the United States and the
FDIC to respond to the Company's  proposed  litigation  time-line by November 5,
2004 which was timely  submitted.  A status  conference  was held on January 11,
2005. On January 12, 2005,  the Court ordered that pursuant to the Court's order
from the bench,  the Defendant's  Motion for  Reconsideration  of the August 31,
2004 Ruling,  and, in the  Alternative,  to dismiss the  Stockholder  Derivative
Claim and the  Complaint-in-Intervention  is denied.  The Court further  ordered
that   this   matter   be  stayed   for  30  days  for  the   Defendant   and/or
Plaintiff-Intervenor   to  consider  filing  a  Request  for  Certification  for
Interlocutory  Appeal. The Court held a telephonic status conference on February
11, 2005 at which time the Court  ordered that fact  discovery  was to resume on
February 14, 2005 and would  continue  for at least three (3) months.  The Court
further  scheduled a telephonic  status  conference for May 2005, to discuss the
need for further discovery.

     On January 12, 2005, Judge Smith denied the government's  motion to dismiss
the Company's remaining claims arising out of damages for breach of contract. On
March 15, 2005, the United States  Department of Justice and the FDIC each filed
motions requesting that Judge Smith certify for immediate appeal his ruling that
the Company is entitled to challenge the validity of the  receivership  deficit.
The Company's filed its reply to these motions on March 29, 2005. In April 2005,
Judge Smith heard oral argument on the United  States  Department of Justice and
the FDIC motions  requesting  that Judge Smith certify for immediate  appeal his
ruling  that  the  Company  is  entitled  to  challenge   the  validity  of  the
receivership  deficit.  Because Judge Smith's ruling on the receivership deficit
issue is not a final  order,  both Judge  Smith and the Court of Appeals for the
Federal  Circuit  would  have to agree to an appeal of that  issue at this time.
Following the April 2005 oral argument,  Judge Smith entered an order,  on April
25, 2005, staying  resolution of the motions to certify an interlocutory  appeal
pending the holding of a "show cause" hearing. Judge Smith indicated at the oral
argument  that the purpose of the show cause hearing was to allow the Company to
outline  the  evidence  and  arguments  it was  prepared  to  offer  in order to
challenge  the  validity  and  size of the  receivership  deficit.  Judge  Smith
directed the parties to attempt to reach agreement  regarding a schedule for the
completion  of discovery on  receivership  deficit  issues,  and he directed the
parties to submit to the Court such an agreed proposed discovery  schedule,  or,
if the parties are unable to reach agreement,  separate  proposed  schedules for
discovery,  in early May 2005.  Judge Smith  further  encouraged  the parties to
discuss the procedures  and schedule for the show cause hearing,  and to provide
the Court with a proposed order on such matters.

     In  accordance  with the  Court's  direction,  the  parties  agreed  upon a
schedule for the  completion of fact discovery and procedures for the show cause
proceeding.  In accordance with the parties'  agreement,  Judge Smith entered an
order on May 23, 2005,  providing that fact discovery would be completed  within
45 days of the completion of document production by the Government.  The May 23,
2005, order further provided that (i) 45 days after the close of discovery,  the
Company is to file a statement of issues  summarizing  the respects in which the
receivership  books allegedly  overstate or misstate the  receivership  deficit;
(ii) 45 days after the filing of the Company's  statement of issues,  the United
States and the FDIC are to file responses; and (iii) 15 days after the filing of
such responses, the Company is to file a reply.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIAIRES
             Notes to Consolidated Financial Statements (continued)

     In May and June of 2005, the Government provided the Company with access to
Carteret's   documents  and  documents   relating  to  the   management  of  the
receivership. The Company selected approximately 3 million pages of documents to
be imaged at the Government's  expense.  In September 2005, a status  conference
was held before Judge Smith.  The  Government  indicated  that it would complete
production  of all the images of the selected  materials by the end of September
2005.  Additionally,  at the status  conference,  all  parties  agreed  that the
schedule  previously  set forth by the  Court's  May 23,  2005  order  should be
changed in one respect:  the Company would be given 75 days from the  completion
of the document production to complete  discovery.  The Court issued an order on
September 26, 2005 memorializing this agreement.  On January 11, 2006, the Court
held a status  conference.  At that time, the Court  indicated that the document
production  would be deemed  complete  as of that  date.  The  Court's  order of
January 13, 2006,  memorialized  this ruling.  Accordingly,  fact  discovery was
completed in April 2006,  and the Company's  statement of issues was  ultimately
filed in June of 2006.  In May 2006,  the Company  served on the  Government  an
expert report in support of some of the arguments the Company made regarding the
size of the receivership deficit. The Company's expert was deposed in July 2006.
In early  August  2006,  the  Government  submitted  its own  expert  report  on
receivership  deficit  issues,  and in October  2006,  the  Company  deposed the
Government's expert. In late August 2006, the Government filed a response to the
Company's  Statement of Issues,  and in September  2006,  the FDIC filed its own
response to the  Statement of Issues.  The Company filed its reply in support of
its  Statement  of Issues  in  October  2006.  A status  conference  was held in
November 2006 and December 2006, to discuss further proceedings. On December 13,
2006,  the Court  entered an order  denying  defendant's  request that the Court
allow an  immediate  appeal of the Court's  ruling that it had  jurisdiction  to
consider the validity of the receivership  deficit. The Court also found that it
continued  to have  jurisdiction  to hear the case.  The Court also  ordered the
parties to enter a schedule for expert  discovery.  Under the proposed  schedule
submitted  by the  parties,  expert  discovery  is scheduled to close in October
2007. A status conference has been set for April 2007. No assurance can be given
regarding the ultimate outcome of the litigation.

     Both the Court of Federal  Claims and the Court of Appeals  for the Federal
Circuit have issued numerous  decisions in cases that involve claims against the
United  States  based upon its breach of its  contracts  with  savings  and loan
institutions  through its 1989 enactment of FIRREA.  In particular,  the Federal
Circuit  has issued  decisions  rejecting  Takings  Clause  claims  advanced  by
shareholders of failed thrifts. Castle v. United States, 301F.3d 1328 (Fed. Cir.
2002);  Bailey v. United  States,  341 F. 3d 1342 (Fed.  Cir 2003)  petition for
certiorari which was filed January 26, 2004. In April 2004, the Company filed an
amicus brief in support of the petition for certiorari filed by Bailey.  In June
2004, the United States  Supreme Court denied the petition for certiorari  filed
by Bailey.  The Court of Claims decision in the Company's case, as well as other
decisions in  Winstar-related  cases, are publicly available and may be relevant
to the Supervisory Goodwill Company's claims, but are not necessarily indicative
of the ultimate outcome of the Company's actions.

     (b) Delaware Court of Chancery  Section 220 Books and Records  Action:  Two
Stockholders who owned approximately  14.4% of the Company's  outstanding common
stock (the "Stockholders") had previously made demand in January 2004 to inspect
certain  Company  books and  records  pursuant  to Section  220 of the  Delaware
General Corporation Law. The Company opposed the request on various grounds, and
the  Stockholders  brought  suit in March 2004 to compel  inspection  of certain
Company  books and  records.  In August  2005,  the Court of  Chancery  issued a
Memorandum   Opinion  finding  that  the  Stockholders  had  met  the  technical
requirements  of Section 220 and had stated a proper  purpose under Section 220,
and were legally entitled to inspect  specified books and records,  but declined
to find the Company liable for the Stockholders' attorneys' fees.


<PAGE>
                       AMBASE CORPORATION AND SUBSIDIAIRES
             Notes to Consolidated Financial Statements (continued)

     In October 2006, in order to eliminate  continued  involvement in the above
referenced action or potential future actions,  and the resultant time,  expense
and potential adverse impact on the Company's current  operations and litigation
claims, the Company, its Chief Executive Officer and principal stockholder,  and
the Company's  Directors entered into an agreement with the Stockholders who had
initiated  the  action to obtain  Company  books and  records.  Pursuant  to the
agreement:  (i)  the  Company's  Chief  Executive  Officer  agreed  to  purchase
6,615,531 shares of Company common stock  (representing  approximately  14.4% of
the Company's outstanding common stock and all of the Company stock beneficially
owned  by the  Stockholders),  for a cash  purchase  price of  $0.55  per  share
($3,638,542  in the  aggregate  for all of the  shares);  (ii) the  Stockholders
agreed to dismiss the books and records action and release any additional claims
the Stockholders  might have,  including  claims the Stockholders  said they had
been  considering  litigating  against the Company,  its Directors and its Chief
Executive  Officer;  (iii) the Stockholders  entered into a standstill and other
agreements  which will preclude them from taking a position in the Company for a
period  of time;  and (iv)  the  Company  agreed  to pay the  Stockholders  $1.1
million.  No  portion  of the  purchase  price for the  shares  acquired  by the
Company's  Chief  Executive  Officer was provided by or financed by the Company.
Although the shares were not offered to the Company for purchase,  the Company's
Board of  Directors  declined  to  purchase  the  shares at the price  they were
offered  to the  Company's  Chief  Executive  Officer.  A  settlement  charge of
$1,100,000  recorded as other expense and related insurance recovery of $400,000
recorded as other income,  have been  reflected  Statement of Operations for the
year ended  December 31, 2006. The net cost to the Company of the settlement was
approximately $700,000. This matter is, therefore, concluded.

     Note 11 - Fair Value of Financial Instruments

     The  carrying  amounts  reported  in the  balance  sheet  for cash and cash
equivalents  approximate  fair  value  due to the  short-term  nature  of  these
instruments.  The fair value of  investment  securities  - held to maturity  and
investment securities available for sale are based on current market quotations.
The carrying  value of  applicable  other  liabilities  approximates  their fair
value.  See note 13 herein for  information  regarding the Company's sale of Two
Soundview in July 2005.

     Note 12 - Property Owned

     The Company owns one commercial  office building in Greenwich,  Connecticut
that  contains   approximately   14,500  square  feet.   The  Company   utilizes
approximately  3,500 square feet for its executive offices;  the remaining space
is  currently  unoccupied  and  available  for  lease.  Depreciation  expense is
recorded  on a  straight-line  basis over 39 years.  The  building is carried at
cost, net of accumulated  depreciation  of $283,000 and $232,000 at December 31,
2006 and 2005,  respectively.  See note 13 herein for information  regarding the
Company's sale of Two Soundview in July 2005.



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIAIRES
             Notes to Consolidated Financial Statements (continued)

     Note 13 - Discontinued Operations

     In May 2005,  the Company  entered into an agreement to sell Two Soundview,
originally purchased in December 2002, to Ceruzzi Holdings, LLC, an unaffiliated
third party. In July 2005, the Company completed the sale of Two Soundview.  The
sale  price  was   $28,000,000   less  normal  real  estate  closing  costs  and
adjustments. As a result of the sale of Two Soundview, the results of operations
of Two  Soundview  have been  designated  as  discontinued  operations,  and the
Consolidated Statements of Operations for the periods presented herein have been
retroactively  reclassified  to report the income from  discontinued  operations
separately from the results of continuing  operations by excluding the operating
revenues and expenses of discontinued  operations from the respective  statement
captions, in accordance with SFAS 144. A gain from the sale, of $10,298,000,  is
reflected in the Company's financial statements for the year ending December 31,
2005.

Net gain on sale of real estate is as follows:
<TABLE>
<CAPTION>
<S>                                                                                            <C>
                                                                                                     2005
(in thousands)                                                                                       =====
Gross sales price.............................................................                     $28,000
Less:  Transactions costs.....................................................                        (558)
                                                                                               -----------
Net cash proceeds.............................................................                      27,442
Less:
    Real estate carrying value (net of accumulated depreciation of $722,000)..                     (16,588)
    Other assets..............................................................                        (556)
                                                                                               -----------
Net gain on sale of real estate...............................................                     $10,298
                                                                                               ===========
</TABLE>
     Transaction  costs above include broker  commissions,  transfer taxes,  and
legal and other fees.  Other assets above includes  $519,000 of deferred  rental
revenue  resulting from the  recognition  of rental  revenue on a  straight-line
basis over the terms of tenant leases versus  contractual  lease payment  terms,
and $37,000 of real estate commissions previously capitalized.

     Income from  discontinued  operations,  as summarized below, for the twelve
months  periods ended  December 31, 2005,  reflects the results of operations of
Two Soundview and the net gain realized upon disposition.

Income from discontinued operations is as follows:
<TABLE>
<CAPTION>
<S>                                                                           <C>               <C>
(in thousands)                                                                   2005             2004
Revenues:                                                                        ====             ====
Rental income.....................................................            $  1,158          $  2,053
Operating expenses:
Professional and outside services.................................                  25                47
Property operating and maintenance................................                 231               357
Depreciation......................................................                 140               280
Insurance.........................................................                  11                17
Other operating...................................................                   2                 7
                                                                            ----------         ---------
                                                                                   409               708
                                                                            ----------         ---------
Income from operation of discontinued property....................                 749             1,345
Gain on disposition...............................................              10,298                 -
Income tax expense on discontinued operations.....................                (400)                -
                                                                            ----------        ----------
Income from discontinued operations...............................            $ 10,647          $  1,345
                                                                            ==========        ==========
</TABLE>



<PAGE>
                       AMBASE CORPORATION AND SUBSIDIAIRES
             Notes to Consolidated Financial Statements (continued)

     The  Company  utilized  NOL  carryforwards  and  AMT NOL  carryforwards  as
available  to offset  taxable  income  generated  from sale of Two  Soundview as
discussed in Note 9 to the Company's consolidated financial statements. However,
due to  limitations  on the amount of NOL  carryforwards  that could be utilized
against  taxable  income,  an income tax provision of $400,000 for  discontinued
operations  attributable to a provision for federal  alternative  minimum tax of
$150,000 and a provision of $250,000 for Connecticut state taxes was recorded in
the fourth quarter ended December 31, 2005.

     Note 14 - Quarterly Financial Information (unaudited)

Summarized quarterly financial information follows:
<TABLE>
<CAPTION>
<S>                                           <C>               <C>              <C>               <C>            <C>
                                               First             Second           Third            Fourth         Full
(in thousands, except per share data)         Quarter           Quarter          Quarter           Quarter         Year
2006:                                         =======           ========         =======           =======        =====
Revenues................................     $     41         $      49          $     2          $      -     $     92
Operating expenses......................        1,913             2,729            1,724             1,521        7,887
Operating loss..........................       (1,872)           (2,680)          (1,722)           (1,521)      (7,795)
                                                ======            ======           ======            ======       =====
Net income (loss).......................     $ (1,485)        $  (2,184)         $(1,964)         $    170     $ (5,463)
                                                ======            ======           ======            ======       ======
Per common share data:
Net income (loss).......................     $   (0.03)       $  (0.05)          $ (0.04)         $    -       $  (0.12)
                                                ======            ======           ======            ======       ======
2005:
Revenues................................     $     43         $      43          $    41          $     43     $    170
Operating expenses......................        1,823             1,791            1,621             1,413        6,648
Operating loss..........................       (1,780)           (1,748)          (1,580)           (1,370)      (6,478)
                                                ======            ======           ======            ======       ======
Loss from continuing operations.........     $ (1,665)        $  (1,632)         $(1,427)         $   (795)    $ (5,519)
Income (loss) from discontinued operations(a)(b)  341               345           10,361              (400)      10,647
                                                ------            ------           ------            ------       ------
Net income (loss) (a)...................     $ (1,324)        $  (1,287)         $ 8,934          $ (1,195)    $  5,128
                                                ======            ======           =====             ======       ======
Per common share data:
Loss from continuing operations.........     $  (0.03)        $  (0.04)          $ (0.03)         $   (0.02)   $  (0.12)
Income (loss) from discontinued operations (a)      -             0.01              0.22              (0.01)       0.23
                                                ------            ------          ------             ------       ------
Net income (loss) (a)...................     $  (0.03)        $  (0.03)          $  0.19          $   (0.03)   $   0.11
                                                ======            ======          ======             ======       ======
</TABLE>
     (a)  Results for the third  quarter and full year 2005,  includes a gain of
$10,298,000 from the sale of real estate.

     (b) The loss from  discontinued  operations for the fourth quarter 2005, is
attributable  to an  additional  tax  provision  of  $250,000  for  discontinued
operations  and  reclassification  of $150,000 of the tax provision for the nine
months ended  September  30, 2005 from  continuing  operations  to  discontinued
operations.


<PAGE>
     ITEM 9. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE. None.

     ITEM 9A. CONTROLS AND PROCEDURES

     The Company maintains  disclosure controls and procedures that are designed
to ensure that  information  required to be disclosed in the Company's  Exchange
Act reports is recorded,  processed,  summarized  and  reported  within the time
periods  specified in the SEC's rules and forms,  and that such  information  is
accumulated and  communicated to the Company's  management,  including its Chief
Executive Officer and Chief Financial Officer,  as appropriate,  to allow timely
decisions  regarding required  disclosure based on the definition of "disclosure
controls and  procedures"  in Rule  13a-15(e).  In designing and  evaluating the
disclosure controls and procedures,  management recognized that any controls and
procedures,  no  matter  how  well  designed  and  operated,  can  provide  only
reasonable assurance of achieving the desired control objectives, and management
necessarily  was required to apply its judgment in evaluating  the  cost-benefit
relationship of possible controls and procedures.

     As of December 31, 2006, the Company  carried out an evaluation,  under the
supervision and with the  participation of the Company's  management,  including
the Company's Chief Executive Officer and the Company's Chief Financial Officer,
of the  effectiveness  of the design and operation of the  Company's  disclosure
controls and procedures.  Based on the foregoing,  the Company's Chief Executive
Officer and Chief  Financial  Officer  concluded  that the Company's  disclosure
controls and procedures were effective.

     ITEM 9B. OTHER INFORMATION

     Not applicable.

     PART III

     ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information  concerning  executive  officers  required  by this item is set
forth  following  Item 4 of Part I of this report  under the caption  "Executive
Officers of the Registrant", pursuant to General Instruction G to Form 10-K. For
the information required to be set forth by the Company in response to this item
concerning  directors  of  the  Company,  see  the  Company's  definitive  Proxy
Statement  for its Annual  Meeting of  Shareholders  to be held on May 18, 2007,
under the  captions  "Proposal  No. 1 - Election of Director"  and  "Information
Concerning  the  Board  and its  Committees",  which is  incorporated  herein by
reference,  which the Company  intends to file with the  Securities and Exchange
Commission not later than 120 days after the close of its 2006 fiscal year.

     Code of Ethics

     We have  adopted  a Code of Ethics  that  applies  to our  Chief  Executive
Officer,  Chief Financial Officer and other senior officers.  A copy of the Code
of Ethics was filed with the SEC as Exhibit 14 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2003.

     ITEM 11. EXECUTIVE COMPENSATION

     For the information  required to be set forth by the Company in response to
this item, see the Company's  definitive  Proxy Statement for its Annual Meeting
of  Shareholders  to be held on May 18,  2007,  under  the  captions  "Executive
Compensation," "Employment Contracts," and "Compensation of Directors" which are
incorporated  herein by  reference,  which the Company  intends to file with the
Securities  and Exchange  Commission  not later than 120 days after the close of
its 2006 fiscal year.



<PAGE>
     ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table summarizes  information about securities authorized for
issuance under equity  compensation plans of the Company at December 31, 2006 as
follows:
<TABLE>
<CAPTION>
<S>                      <C>                          <C>                          <C>
                         Shares to be issued           Weighted average
                          upon exercise of             exercise price of            Shares available for
                         outstanding options          outstanding options             future issuance
                         ===================          ===================          =====================
Equity Compensation
   Plans approved
   by stockholders               1,240,000            $              1.01                     3,760,000

Equity Compensation
   Plan not approved
   by stockholders                  -                                  -                        110,000
                            --------------            -------------------             -----------------
Total                            1,240,000            $              1.01                     3,870,000
                            ==============            ===================             =================
</TABLE>
     Plan not approved by stockholders

     The Company has 110,000  shares of common stock reserved for issuance under
the AmBase  Corporation  Stock Bonus Plan (the "Stock  Bonus  Plan"),  which was
approved by the Board of  Directors  of the Company in 1989.  The purpose of the
Stock Bonus Plan is to encourage  individual  performance and to reward eligible
employees whose performance,  special achievements,  longevity of service to the
Company or suggestions  make a significant  improvement or  contribution  to the
growth and profitability of the Company. The Stock Bonus Plan is administered by
the  Personnel  Committee of the Board of  Directors.  Members of the  Personnel
Committee  are not eligible for an award  pursuant to the Stock Bonus Plan.  The
Company's  President may also designate  eligible  employees to receive  awards,
which are not to be in excess of 100 shares of Common Stock. No fees or expenses
of any kind are to be charged to a  participant.  Any  employee of the  Company,
except for certain officers or directors of the Company, are eligible to receive
shares  under the Stock  Bonus  Plan.  Distributions  of shares may be made from
authorized but unissued shares,  treasury shares or shares purchased on the open
market.

     For other  information  required to be set forth by the Company in response
to this  item,  see the  Company's  definitive  Proxy  Statement  for its Annual
Meeting of  Shareholders  to be held on May 18, 2007,  under the caption  "Stock
Ownership", which is incorporated herein by reference, which the Company intends
to file with the  Securities  and  Exchange  Commission  not later than 120 days
after the close of its 2006 fiscal year.

     ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     For the information  required to be set forth by the Company in response to
this item, see the Company's  definitive  Proxy Statement for its Annual Meeting
of Shareholders to be held on May 18, 2007, under the captions "Proposal No. 1 -
Election  of  Directors"   and   "Information   Concerning  the  Board  and  its
Committees,"  which are  incorporated  herein by  reference,  which the  Company
intends to file with Securities and Exchange  Commission not later than 120 days
after the close of its 2006 fiscal year.

     ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information  concerning  Principal  Accountant Fees and Services is set
forth by the Company under the heading  "Proposal 2 - Appointment of Independent
Registered Public  Accounting Firm" in the Company's  definitive Proxy Statement
for its Annual  Meeting of  Shareholders  to be held on May 18,  2007,  which is
incorporated  herein by  reference,  which the Company  intends to file with the
Securities  and Exchange  Commission  not later than 120 days after the close of
its 2006 fiscal year.



<PAGE>
     PART IV

     ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
<S>     <C>                                                                                                    <C>
(a) Documents filed as a part of this report:

1.   Index to Financial Statements:                                                                            Page

         AmBase Corporation and Subsidiaries:
              Report of Independent Registered Public Accounting Firm...........................................18
              Consolidated Statements of Operations.............................................................19
              Consolidated Balance Sheets.......................................................................20
              Consolidated Statements of Changes in Stockholders' Equity........................................21
              Consolidated Statements of Comprehensive Income (Loss)............................................21
              Consolidated Statements of Cash Flows.............................................................22
              Notes to Consolidated Financial Statements........................................................23
</TABLE>
     2. Index to Financial Statements Schedules:

     Schedule III - Real Estate and Accumulated Depreciation

     (b) 3.  Exhibits:

     3A. Restated Certificate of Incorporation of AmBase Corporation (as amended
through  February  12,  1991)  (incorporated  by  reference to Exhibit 3A to the
Company's Annual Report on Form 10-K for the year ended December 31, 1990).

     3B.  By-Laws of AmBase  Corporation  (as amended  through  March 15, 1996),
(incorporated  by reference to Exhibit 3B to the Company's Annual Report on Form
10-K for the year ended December 31, 1995).

     4. Rights  Agreement  dated as of February 10, 1986 between the Company and
American Stock  Transfer and Trust Co. (as amended March 24, 1989,  November 20,
1990, February 12, 1991, October 15, 1993, February 1, 1996 and November 1, 2000
and November 9, 2005),  (incorporated by reference to Exhibit 4 to the Company's
Annual Report on Form 10-K for the year ended  December 31, 1990,  the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1993,
the Company's  Annual Report on Form 10-K for the year ended  December 31, 1995,
the  Company's  Quarterly  Report on Form 10-Q for the  quarterly  period  ended
September 30, 2000),  and the  Company's  Quarterly  Report on Form 10-Q for the
quarterly period ended September 30, 2005, respectively).

     10A.   1985  Stock  Option  Plan  for  Key  Employees  of  AmBase  and  its
Subsidiaries  (incorporated  by reference to Exhibit 10B to the Company's Annual
Report on Form 10-K for the year ended December 31, 1989).

     10B. 1993 Stock  Incentive  Plan as amended  (incorporated  by reference to
Exhibit  A  to  the  Company's   Proxy  Statement  for  the  Annual  Meeting  of
Stockholders held on May 28, 1998).

     10C. 1994 Senior Management  Incentive  Compensation Plan  (incorporated by
reference to Exhibit A to the Company's  Proxy  Statement for the Annual Meeting
of Stockholders held on May 27, 1994).

     10D.  AmBase  Officers  and Key  Employees  Stock  Purchase  and Loan  Plan
(incorporated by reference to Exhibit 10E to the Company's Annual Report on Form
10-K for the year ended December 31, 1989).

     10E.  AmBase  Supplemental  Retirement Plan  (incorporated  by reference to
Exhibit  10C to the  Company's  Annual  Report on Form  10-K for the year  ended
December 31, 1989) and as amended March 30, 2006  (incorporated  by reference to
Exhibit  10E to the  Company's  Annual  Report on Form  10-K for the year  ended
December 31, 2005).

     10F.  Assignment  and  Assumption  Agreement  dated as of August 30,  1985,
between the Company and City  Investing  Company  (incorporated  by reference to
Exhibit  28 to the  Company's  Current  Report on Form 8-K dated  September  12,
1985).


<PAGE>
     10G.  Employment  Agreement  dated as of June 1, 1991  between  Richard  A.
Bianco and the Company,  as amended December 30, 1992 (incorporated by reference
to Exhibit 10G to the  Company's  Annual  Report on Form 10-K for the year ended
December 31, 1992), as amended February 24, 1997,  (incorporated by reference to
Exhibit  10G to the  Company's  Annual  Report on Form  10-K for the year  ended
December 31,  1996),  as amended  March 6, 2001,  (incorporated  by reference to
Exhibit  10G to the  Company's  Annual  Report on Form  10-K for the year  ended
December 31, 2000), and as amended December 16, 2001, (incorporated by reference
to Exhibit 10G to the  Company's  Annual Report on Form 10-K for the year ending
December 31, 2001).

     10H.  Employment  Agreement  dated as of March 30, 2006 between  Richard A.
Bianco and the Company,  for employment  from June 1, 2007 through May 31, 2012,
(incorporated by reference to Exhibit 10H to the Company's Annual Report on Form
10-K for the year ending December 31, 2005).

     14.  AmBase  Corporation  - Code of Ethics as adopted by Board of Directors
(incorporated  by reference to Exhibit 14 to the Company's Annual Report on Form
10-K for the year ending December 31, 2003).

     21. Subsidiaries of the Registrant.

     23. Consent of Independent Registered Public Accounting Firm.

     31.1 Rule 13a-14(a)  Certification  of Chief Executive  Officer Pursuant to
Rule 13a-14.

     31.2 Rule 13a-14(a)  Certification  of Chief Financial  Officer Pursuant to
Rule 13a-14.

     32.1 Section 1350 Certification of Chief Executive Officer pursuant to Rule
18 U.S.C. Section 1350.

     32.2 Section 1350 Certification of Chief Financial Officer pursuant to Rule
18 U.S.C. Section 1350.

     Exhibits, except as otherwise indicated above, are filed herewith.




<PAGE>
Signatures

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

AMBASE CORPORATION



/s/ RICHARD A. BIANCO
Chairman, President and Chief Executive
Officer (Principal Executive Officer)
Date:  March 29, 2007

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities on the dates indicated.




/s/ RICHARD A. BIANCO                  /s/ JOHN P. FERRARA
Chairman, President,                   Vice President, Chief Financial Officer
Chief Executive Officer and Director   and Controller
Date:  March 29, 2007                  (Principal Financial and
                                        Accounting Officer)
                                        Date:  March 29, 2007



/s/ ROBERT E. LONG                     /s/ SALVATORE TRANI
Director                               Director
Date:  March 29, 2007                  Date:  March 29, 2007



/s/ PHILIP M. HALPERN
Director
Date:  March 29, 2007
<PAGE>
                       AMBASE CORPORATION AND SUBSIDIARIES
             SCHEDULE III. REAL ESTATE AND ACCUMULATED DEPRECIATION
                                December 31, 2006
                             (dollars in thousands)
<TABLE>
<CAPTION>
<S>             <C>                     <C>                       <C>                       <C>
COLUMN A        COLUMN B                COLUMN C                  COLUMN D                              COLUMN E
---------       --------         ----------------------           --------                  -------------------------------=
                                                                  Cost Capitalized
                                                                  Subsequent to             Gross Amount at which Carried at
                                 Initial Cost to Company          Acquisition                      the Close of the Period
                                 ======================           ================          ================================
                                                 Building &                                    Building &
Description          Encumbrances     Land       Improvements    Improvements       Land       Improvements      Total
===========          ============    ======      ============    ============      ======      ============      ======
Office Building:
Greenwich, CT...  $          -       $  554      $      1,880    $         20      $  554      $      1,900      $2,454
                  ---------------    ------      ------------    ------------      ------      ------------      ------
Total...........  $          -       $  554      $      1,880    $         20      $  554      $      1,900      $2,454
                  ===============    =======     ============    ============      ======      ============      ======

     [Additional  columns below]  [Continued  from above table,  first column(s)
repeated]

COLUMN A              COLUMN D                COLUMN G                  COLUMN H                              COLUMN I
---------             --------         ----------------------           --------                  ---------------------------
                     Accumulated                                                                    Life on Which Depreciated
Description         Depreciation           Date Constructed           Date Acquired                  Latest Income Statement
===========         ============           ================           =============               ===========================
Office Building:
Greenwich, CT...    $        283                      1970               Apr.-01                                39 years
                    ------------           ================           =============               ===========================
Total...........    $       283
                    ===========

     [a] Reconciliation of total real estate carrying value is as follows:

                                               Year Ended                  Year Ended                Year Ended
                                            December 31, 2006           December 31, 2005         December 31, 2004
                                            =================           =================         =================
Balance at beginning of year...........     $          2,454            $          19,764         $          19,764
Improvements...........................                    -                            -                         -
Acquisitions...........................                    -                            -                         -
Disposition.............................                   -                      (17,310)                        -
                                            -----------------           -----------------         -----------------
Balance at end of year.................     $          2,454            $           2,454         $          19,764
                                            =================           =================         =================
Total cost for federal tax
purposes at end of each year...........     $          2,454            $           2,454         $          19,764
                                            =================           =================         =================

     [b] Reconciliation of accumulated depreciation as follows:

Balance at beginning of year...........     $            232            $             763         $             433
Depreciation expense...................                   51                          191                       330
Dispositions...........................                    -                         (722)                        -
                                            -----------------           -----------------         -----------------
Balance at end of year.................     $            283            $             232         $             763
                                            =================           =================         =================
</TABLE>

<PAGE>
     DIRECTORS AND OFFICERS
<TABLE>
<S>                              <C>                               <C>                        <C>
Board of Directors
Richard A. Bianco                Robert E. Long                    Salvatore Trani            Philip M. Halpern
Chairman, President and          Chairman, Chief                   Executive Vice             Managing Partner
Chief Executive Officer          Executive Officer                 President                  Collier, Halpern, Newberg,
AmBase Corporation               GLB Group, Inc.                   BGC Partners, L.P.         Nolletti & Bock, LLP

AmBase Officers
Richard A. Bianco                John P. Ferrara                          Joseph R. Bianco
Chairman, President and          Vice President, Chief Financial Officer  Treasurer
Chief Executive Officer          and Controller
</TABLE>
     INVESTOR INFORMATION
<TABLE>
<S>                                                                  <C>
 Annual Meeting of Stockholders                                      Corporate Headquarters

 The 2007 Annual Meeting is currently  scheduled to be held          AmBase Corporation
 at 9:00 a.m. Eastern Time, on Friday, May 18, 2007, at:             100 Putnam Green, 3rd Floor
                                                                     Greenwich, CT  06830-6027
     Hyatt Regency Hotel                                             (203) 532-2000
     1800 East Putnam Avenue
     Greenwich, CT  06870
                                                                     Stockholder Inquiries

 Common Stock Trading                                                Stockholder  inquiries,  including requests for the
 ====================                                                following:  (i) change of address; (ii) replacement of
 AmBase stock is traded through one or more market-makers            lost stock certificates; (iii) Common Stock name
 with quotations made available in the "pink sheets"                 name registration changes; (iv) Quarterly Reports
 published by the National Quotation Bureau, Inc.                    on Form 10-Q; (v) Annual Reports on Form 10-K; (vi) proxy
                                                                     material; and (vii) information regarding stockholdings,
 Issue                Abbreviation       Ticker Symbol               regarding stockholdings, should be directed to:

 Common Stock         AmBase             ABCP                        American Stock Transfer and Trust Company
                                                                         59 Maiden Lane
                                                                         New York, NY  10038
 Transfer Agent and Registrar                                            Attention: Shareholder Services
 ============================
                                                                         (800) 937-5449 or (718) 921-8200 Ext. 6820
 American Stock Transfer and Trust
     Company                                                         In  addition,   the   Company's   public   reports,
 59 Maiden Lane                                                      including  Quarterly  Reports on Form 10-Q,  Annual
 New York, NY  10038                                                 Reports on Form 10-K and Proxy  Statements,  can be
 Attention: Shareholder Services                                     obtained   through  the   Securities  and  Exchange
 (800) 937-5449 or (718) 921-8200 Ext. 6820                          Commission  EDGAR  Database over the World Wide Web
                                                                     at www.sec.gov.

 Independent Registered Public Accountants                           Number of Stockholders

 PricewaterhouseCoopers LLP                                          As of February 28, 2007, there were
 PricewaterhouseCoopers Center                                       approximately 14,300 stockholders.
 300 Madison Avenue, 32nd Floor
 New York, NY  10017
</TABLE>